The Washington Post

Retail sales jump by the most in 18 months

A pedestrian walks past a Jos A. Bank store in New York. March retail sales rose by the most in nearly 2 years, after a brutal winter kept consumers away from stores. (Craig Warga/Bloomberg)

Spring is here, and so are the shoppers.

March retail sales rose by the most in 18 months, after a brutal winter kept consumers away from stores early this year, according to government data released Monday.

But the uptick is probably temporary. Economists say that the increase was because of pent-up demand and doesn’t mean consumer spending is at full strength.

“It’s basically a turning point from the winter,” said Chris Christopher, senior economist at IHS Global Insight. “But the overall momentum this year is not going to be great.”

American consumers are still cautious spenders, economists say, and there are other financial hurdles on the horizon. The expiration of unemployment benefits and cuts to the nation’s food-stamp program are hurting
lower-income shoppers, which is expected to hit the profits of discount stores this year.

In addition, consumers who didn’t shop for goods in the beginning of 2014 spent money on services such as health care and utilities, economists say. As they turn back to buying goods, spending on services will suffer.

“While a welcomed sign, we expect this ‘rebound’ to be short-lived,” Lindsey Piegza, chief economist at Sterne Agee, said in a research note.

Retailers reported dismal sales numbers in December and January, which they largely blamed on bad weather. In contrast, March sales were up by 1.1 percent from the previous month and 3.7 percent from the corresponding period last year, according to the Commerce Department report. February sales were also revised higher.

Some of the gains were led by higher auto sales, which rose more than 3 percent. Excluding autos, retail sales still rose by more than 1 percent in March.

The biggest gains were posted in the general merchandise stores category, which includes big-box retailers such as Wal-Mart and Target. Sales were up 1.9 percent in that segment. Clothing and furniture store sales rose by 1 percent each, while electronics and appliance store sales fell by 1.6 percent.

Retail sales are expected to increase by a modest 4.1 percent in 2014, which is marginally higher than last year, according to a forecast by the National Retail Federation.

Amrita Jayakumar covers national startups, small business issues and entrepreneurship.



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