Consumer Spending Rebounds in March, But Will It Last?
U.S. retail sales grew in March after two straight months of declines, in an apparent stocking up by Americans to beat looming tariff-related price hikes.
Total retail sales, excluding automobiles and gasoline, in March were up 0.6 percent seasonally adjusted from February, according to the CNBC/NRF Retail Monitor. That compares to month-over-month sales decreases of 0.22 percent in February and 1.07 percent in January.
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The Retail Monitor also reported March retail sales rose 4.75 percent unadjusted from March 2024, and that for the first three months of 2025 total sales were up 4.52 percent from the same period a year ago. Core sales, which excludes restaurants, automobile deals and gas stations, were up 4.96 percent for the first three months of this year from the same period in 2024.
But the recent retail bounce back is not likely to last for long, with economists and retail analysts raising the possibility of a recession this year, amid tanking consumer sentiment and the spectre of tariffs. There is also confusion over what tariffs implemented by the Trump administration will stick or be rescinded, furthering anxiety among the populace. As consumer sentiment further drops, Americans will be more inclined to squirrel away savings rather than spend. The University of Michigan's closely watched monthly surveys of hundreds of consumers have shown sentiment nosediving this year.
The National Retail Federation was hardly jumping for joy over the March bounce back in sales.
'Retail sales increased in March but only moderately, and the spending came before the president's 'Liberation Day' tariff announcement,' NRF president and chief executive officer Matthew Shay said in a statement. 'The pullback we've seen the past few months comes despite strong economic fundamentals. A major factor appears to be driven by the uncertainty caused by tariffs. March's increase is partly the result of stocking up to get ahead of tariffs. With the economic outlook unclear and the situation fluid, consumer sentiment is weakening, and many consumers are shifting disposable income into savings.'
U.S. President Donald Trump announced tariffs on China, Canada and Mexico in February and a minimum 10 percent tariff on all U.S trading partners on April 2 along with sweeping 'reciprocal' tariffs on dozens of countries, which have been suspended for 90 days. Additional tariffs on China have resulted in a trade war between the two countries. Before the April 2 'Liberation Day' tariff announcement, a survey conducted for NRF by Prosper Insights & Analytics found 46 percent of consumers said they were stocking up on household appliances, clothing and other items in early March because they were worried they would become more expensive because of tariffs.
Getting granular, the Retail Monitor reported clothing and accessories stores were up 0.76 percent month-over-month seasonally adjusted, and up 2.37 percent year-over-year unadjusted, while digital products were up 0.79 percent month-over-month seasonally adjusted and up 27.62 percent, year-over-year unadjusted. Health and personal care stores were down 0.44 percent month-over-month seasonally adjusted but up 5.39 percent year-over-year unadjusted. General merchandise stores were up 0.48 percent month-over-month seasonally adjusted and up 7.62 percent year-over-year unadjusted.
In addition:
Sporting goods, hobby, music and book stores were unchanged month-over-month seasonally adjusted but up 6.63 percent year-over-year unadjusted.
Electronics and appliance stores were down 0.29 percent month-over-month seasonally adjusted but up 5.94 percent year-over-year unadjusted.
Grocery and beverage stores were up 0.65 percent month-over-month seasonally adjusted and up 3.05 percent year over year unadjusted.
The Retail Monitor uses credit and debit card purchase data compiled by Affinity Solutions and does not need to be revised monthly or annually.
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