- Steve Murphy, Capital Economics
US retail sales unexpectedly declined in March as households cut back on purchases of automobiles, reinforcing the evidence that economic growth weakened in the first quarter and a sign of consumers caution amid slow wage growth and overseas troubles. Sales at retail stores and restaurants slid by a seasonally adjusted 0.3% in March, despite the forecasted 0.1% gain, according to the Commerce Department, following a flat reading in February and a drop in January. Most economists had not expected from Americans to be so cautious about their spending this year, despite steady job gains and lower gas prices. This is a key reason why a lot of analysts now believe the world's number one economy barely expanded in the first quarter of 2016. In the meantime, core retail sales rose 0.2% last month after being little changed in February. Economists claim that the increase was due to a 0.9% jump in receipts at service stations that probably reflected the recent pickup in gasoline prices.
In addition to that, the surprise weakness in the retail sales data underscores concerns among several Federal Reserve officials, who have dramatically pared back their expectations for rate rises this year amid increased concerns about the growth outlook, turbulence abroad and troubles in the energy and industrial sectors.
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