Are Retail Sales Set To Rebound?

While the economy has all the signs of a healthy spring in store, consumers are proving to be late bloomers so far in 2016.

According to a recent article from USA Today, consumer spending continues to lag, despite several key indicators in the economy suggesting it should be picking up steam as the weather heats up. As the article points out, job growth has been strong, gasoline prices are maintaining despite a recent rise and households continue to pay down debt after a credit boom during the mid-2000s left many with a deep hole to dig out of. All strong indicators that consumer confidence and spending should be higher — but they’re not.

There are a number of elements that may be contributing to the slow consumer spending, including the stock market selloff that happened earlier in the year. Some experts, including RBC Capital Markets, feel it may have dampened consumer confidence and derailed plans for spending. While stocks have rebounded smartly since February, consumer spending has not. Lackluster auto sales last month also may be an indicator of underlying uncertainty among consumers and likely attributed to the overall slow retail sales growth, the firm told USA Today.

The Commerce Department is preparing to release a key report today (April 13), with economists predicting a tepid 0.1 percent increase in headline retail sales but a solid 0.3 percent jump in the core reading.

This “core” measure of inflation, according to USA Today and the experts the outlet spoke to, does not include food and energy items and has risen sharply over the last two months. All of this leads some Federal Reserve officials to have confidence that price gains are accelerating and that another hike in interest rates may be warranted later this spring, according to the outlet.


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