US Retail Sales Rise in March as Shoppers Spend Ahead of Tariffs

U.S. retail sales saw strong growth in March, with consumers rushing to buy big-ticket items like cars as the threat of tariffs — and likely higher costs as a result — loomed large. The U.S. Census Bureau reported Wednesday that overall retail sales in March were up 1.4 percent over the same period last year, with sales of motor vehicles and parts dealers rising 5.3 percent. Other verticals that saw growth in March were electronics, sporting goods, and clothing and accessories. The March figures represent a .2 percent growth over last month. 

Total Retail's Take: President Donald Trump began threatening to impose tariffs shortly after he took office for his second term in January. Consumers and companies alike have been subject to a rollercoaster of a news cycle since February as Trump has announced — and then paused — tariffs on many countries with which U.S. companies are dependent on to manufacture products.

One tariff that — at least for the time being — remains in place is a 145 percent tariff against China, which has responded with retaliatory tariffs in what's quickly becoming a trade war. The U.S. Census Bureau numbers from March show American shoppers responded to the economic uncertainty by accelerating purchases to get ahead of higher prices. However, consumer confidence in the economy took a hit, with the University of Michigan reporting last week consumer sentiment dropped 11 percent to 50.8, the second-lowest reading on record since 1952, according to CNN.

"The consumer isn't feeling great given the confusion of policy announcements from Washington," said Jack Kleinhenz, the National Retail Federation's chief economist, in a statement. "On-again, off-again tariffs and resulting turmoil in the stock market and world economy are clearly impacting consumer concerns about higher prices and future consumer spending growth."

David Silverman, senior director of Fitch Ratings, said spending on discretionary categories is likely to weaken as the year progresses. He said we can expect updated planning assumptions in May, when most retailers will report their first-quarter earnings. 

"We expect a somewhat high degree of uncertainty around the impact on consumer pricing, sales volumes and profitability given changing policies and lack of historical comparables," Silverman said.