What might make the March retail report a surprise

By Theresa Sheehan, Econoday Economist
April 13, 2022

The data on March retail sales is set for 8:30 ET on Thursday, April 14. This is the last report that is likely to have an impact on expectations for the advance estimate for first quarter GDP. At this writing, the Econoday median forecast for retail and food service sales calls for a 0.6 percent overall rise, a 1.0 percent gain excluding motor vehicles, in contrast to a 0.1 percent dip excluding both motor vehicles and gasoline. March retail data are subject to a few things that can make it hard to forecast. Some influences to keep in mind:

• Motor vehicle sales were down in March (13.3 million annual rate) versus February (14.0 million). However, consumers were buying undiscounted vehicles and more expensive ones as they competed for limited inventories. The dollar value of sales for motor vehicles and parts may not be down as steeply as the unit count suggests.
• The weekly price per gallon of regular gasoline spiked to $4.315 in the March 14 week, a peak that surpasses the highs seen in mid-2008. While this will have an impact on some consumers’ buying of gasoline where they will start to combine local trips and cancel some travel plans, this also falls during the spring break period. Sales of motor fuels will see increases in volume which in turn will drive the dollar value higher. Also, this a much larger increase than normally anticipated by seasonal adjustment factors.
• Speaking of spring break travel, freer movement and an initial end to masking restrictions will help sales at restaurants and bars. Milder weather will also encourage patronage at local establishments.
• Consumers also seem eager to get a start on outdoor projects which could benefit building materials and garden center sales. Consumers are facing higher prices for many goods due to shortages which will also lift the dollar value of sales.
• The timing of the Easter/Passover observances may pull some holiday sales into late in March but will predominantly help April. This year both holidays are around mid-April, which means consumers will be buying items associated with these in the first weeks of that month. Aggressive retailer discounting and worries about short supplies may have led to some buying in late March for groceries, department stores, and clothing and accessory outlets.
• The average size of tax refunds could mean increased spending was a little larger than it might have been. This could have encouraged spending on some big-ticket items like appliances and home furnishings.