March came in like a lion and went out like a lamb — for retailers, at least.
Stores may have seen the biggest jump in sales since July last month, as consumers dusted off their credit cards after a frigid winter curled up at home.
The U.S. Census Bureau will release its monthly retail sales report Monday. Economists predicted that consumer spending went up 0.5 percent in March, excluding autos, a 0.2 percent increase from February sales. It’s a welcome departure from disappointing spending the first few months of the year, when record cold temperatures and crippling snowstorms kept shoppers off the roads and out of stores.
“The key story is we’ve had this severe winter weather that’s really affected sales in January and February,” said Michael A. Brown, an economist at Wells Fargo. “We expect some payback.”
But a robust March for consumer spending won’t be enough to give first quarter growth a last-minute boost, said Brown.
“It’s a little scary, I have to be honest with you,” he said.
Brown estimated that first quarter GDP grew 0.4 percent, compared with 2.6 percent last quarter and 4.1 percent in the third quarter of 2013. Weak retail sales, swings in business inventories and slow growth in international trade were all factors, he said, but warmer weather in the coming months will help put the economy on better footing.
March job gains will also give retailers a boost, since more jobs means more workers with spendable income. The private sector finally added back all of the jobs lost during the recession, the Bureau of Labor Statistics reported earlier this month. Employers added 192,000 jobs in March, up from 175,000 in February, and all of those gains came from the private sector.
But even though the jobless are finding relief, their pay isn’t growing as fast as it was before the recession. In a speech on March 31, Federal Reserve Chair Janet Yellen highlighted the fact that wages have increased just 2 percent a year since 2008, a very low rate historically.
Employers aren’t feeling the pressure to raise pay because there’s such a large pool of potential workers to draw from, said Scott Brown, chief economist at Raymond James. And reduced raises have cut down on shoppers’ ability, and desire, to spend.
“You’re not getting a whole lot of firepower for the typical consumer,” said Brown.