The U.S. Census Bureau releases its advance monthly retail sales report for March on Monday. Economists surveyed by Bloomberg are forecasting a 0.4 percent increase in the headline number, the first gain for a relatively unimpressive quarter. Here are five things to watch in the report.

1. A rebound induced by tax cuts, late returns on withholdings

Although economic spur from the tax cut package was expected to show up in last month’s retail numbers, many economists said it was too early to see the impact of boosts in take-home pay on spending. Consumers who receive their earnings in the form of a direct deposit may not have immediately seen the increase in their paycheck. Others may have been waiting to use the extra money. Those who filed their taxes late may not have received their return yet.

“Typically it’s going to show up with a bit of a lag,” said Raymond James’ Chief Economist Scott Brown. “I think we’re probably overdue for an increase.”

2. More jobs, more spending

The U.S. economy has added an average of just over 200,000 jobs per month so far in 2018. Though growth eased in March, unemployment remains at a low 4.1 percent, pointing to a healthy labor market. Analysts said the conditions should boost consumer spending.

“If you get job growth, more people working and more people getting paychecks, consumer spending will rise and vice versa,” said Hugh Johnson, chief investment officer of the financial consulting firm Hugh Johnson Advisors LLC. “It’s really that simple.”

“The question is, will the new employees spend the money or save the money?” Johnson said.

3. Saving vs. Spending

Despite the positive consumer sentiment driven by job growth and rising paychecks, weak spending numbers in the last few months have left many economists puzzled. Some have theorized that households are saving their extra income or using it to pay off debt accumulated last year. If Monday’s report goes against the estimates, this may signal a trend of consumers becoming more cautious.

“People don’t spend confidence, they spend income,” Brown said. “If people’s incomes are rising, they may not necessarily spend it right away.”

4. Revisions in last month’s numbers

In last month’s report, data for the month of January was revised to show retail sales fell 0.1 percent instead of the 0.3 percent decline that was previously reported. December’s figure had also been revised, though, downward. Analysts said Monday’s release is likely to show a favorable correction in consumer spending figures for the month of February. Many economists cautioned against taking the slowdown in recent months as a sign of a weak first quarter.

“The numbers from the last few months seem implausibly soft,” said Lou Crandall, chief economist at the research firm, Wrightson ICAP. “This is a series that can be very volatile and often gets revised.”

Revisions in the Census data reflect a new sample and new seasonal factors. Predictions of a positive revision align with the consensus forecast of overall growth in the first quarter of 2018.

5. The weight of auto sales and gasoline prices on the overall figure


source: tradingeconomics.com
Unexpectedly strong U.S. auto sales in March are expected to drive the headline number up in Monday’s report. A decline in purchases of automobiles in the first months of 2018 weighed retail sales down, but economists predict the rebound will show in Monday’s report. Sales of cars and light trucks rose at their fastest rate so far this year.

With gasoline prices at their highest since 2016, however, sales at service stations may pull retail sales down, according to Stan Shipley, managing director and economist at the investment banking research firm, Evercore ISI.

“Jobs look solid, wages are accelerating—the question or concern is oil prices,” Shipley said. “Consumer spending likely won’t drive the economy, but it won’t be so lackluster to weigh it down, either.”