Economic Report: Retail sales flat in April as gas savings continue to be pocketed
WASHINGTON (MarketWatch) — Sales at U.S. retailers were flat in April as American shoppers maintained their thrifty ways, a trend that’s intensified since the end of last summer despite cheaper gas.
American went out to eat more and made plenty of Internet purchases, but they cut back on gasoline, autos, home furnishings and electronic goods, among other things.
Sales were only slightly better if autos and gasoline are excluded.
Sales minus autos, which accounts for one-fifth of all retail purchases, rose a scant 0.1%. That’s well below the 0.4% Wall Street forecast. And sales minus both autos and gasoline edged up 0.2%.
Revised figures do show that consumers spent more in March, but Americans have pared back spending since the end of last summer.
Sales in the past 12 months have slowed to a 0.9% rate, the smallest year-over-year gain since October 2009 just after the U.S. exited the Great Recession. The pace of sales had briefly hit a two-year peak of 5% last August.
For months economists have been insisting that a surge in hiring in 2014 — the U.S. added the most jobs in 15 years — would drive spending higher this year and give the economy an added boost. Cheaper gas prices were supposed to help.
It hasn’t worked out that way so far. A survey from credit-card issuer Visa, for example, found that half of Americans planned to pocket whatever they save from cheaper gasoline and a quarter planned to use the extra cash to pay off debt. Only 25% of Americans expected to spend what they saved filling up.
Another study from the Federal Reserve shows that consumers cut their use of credit cards in the first quarter by the biggest amount in four years. Americans are more wary of incurring large debts, especially on plastic, after a big scare during the Great Recession.
The most rapidly rising debts of households these days are college loans. Americans are also spending more on services such as health care, a big reason why overall consumer spending has not slowed as much as retail sales.
Still, most economists expect warmer weather to spawn an increase in retail sales after a harsh winter kept millions of Americans stuck indoors. Retail sales account for one-third of consumer spending, the main engine of U.S. economic activity.
In April, Internet retailers, drug stores and companies that sell music, books and sporting goods all posted an 0.8% increase in sales, while restaurants saw a 0.7% gain. Sales also rose 0.3% for home-improvement stores.
Yet sales of home furnishings dropped 0.9% and electronics stores registered a 0.4% decline. Department stores performed even worse, with sales slumping 2.2%, government figures show.
Sales at gas-stations fell 0.7% in April and they declined 0.4% at auto dealers. Sales of cars and trucks were very strong in March, however, so softer sales in April were expected.
Retail sales in March, meanwhile, were revised to show a stronger 1.1% increase instead of 0.9%. Sales may have gotten a boost from an earlier Easter, sending shoppers to the stores late in the month. An early Easter may have also contributed to weak retail sales in April.