Buyer beware? Retail sales last month surged to their highest levels in two years as shoppers went on a spending spree to try to beat the clock on President Donald Trump’s tariffs. But the numbers suggest worry about the future of the U.S. economy, not positivity.
The U.S. Census Bureau said Wednesday in its Monthly Retail Trade survey that retail sales climbed 1.4% in March compared with the previous month — which was up from February’s 0.2% gain. It was the highest monthly gain since 2023. And the number was even a little higher than expected; analysts had forecasted a 1.3% jump.
Big-ticket items such as cars lead the way
The leading drivers for the figures were sales of cars and auto parts — both of which have been hit hard by the president’s tariffs. Minus those purchases, retail sales were up just 0.5% in March compared with the previous month.
Sales at motor vehicles and parts dealers rose 5.3% — likely due to fears of heavy rises in auto costs. In fact, the auto industry has already been hit hard by the administration’s trade war. Trump’s tariffs included a 25% levy on all light-vehicle imports to the U.S. that went into effect on April 3 and a matching 25% on auto parts that is set to go into effect on May 3.
Home improvement stores saw the second-largest bump: 3.3%. Sales rose elsewhere, too: electronics stores, sporting goods stores, clothing and accessories stores, grocery stores, and online retailers. Building materials and garden equipment saw a 3.3% boost; sales at sporting goods, hobby, musical instrument, and book stores rose 2.4%. And restaurants saw a 1.8% boost in sales.
Furniture stores, department stores, and gas stations, however, posted a decline. All the numbers are adjusted for seasonal swings but not inflation.
Retail sales figures suggest a ‘blowout’ sale
Christopher S. Rupkey, chief economist at FwdBonds, called March’s retail sales “blowout numbers” where “the rush is on like this is one gigantic clearance sale” in commentary issued Wednesday.
In commentary issued Wednesday, Christopher S. Rupkey, chief economist at FwdBonds, said March’s retail sales were “blowout numbers” and that “the rush is on like this is one gigantic clearance sale.
Consumers are expecting sharply higher prices the next year and are clearing the store shelves and picking up bargains while they can,” he said.
In early April, Trump announced his “Liberation Day” sweeping tariffs on all countries and heavy reciprocal levies on certain trading partners. As of right now, Trump has imposed: a baseline 10% tariff on all U.S. imports, a hefty 145% duty on Chinese imports, 25% tariffs on imports from Mexico and Canada that aren’t part of a free-trade agreement, and 25% tariffs on aluminum and steel.
The Trump administration has since said that tariffs on semiconductors, pharmaceuticals, copper, and timber are expected down the line and that the exemptions for some electronic goods are temporary.
Predictions remain grim for months ahead
Economists expect the economy — and retail sales — to fall over the next few quarters as the president’s erratic tariff policies continue to play out and affect different market sectors.
“With the economy set to cool sharply in the coming months as tariffs take their toll, price-sensitive consumers are poised to become more judicious with their spending and reduce their nonessential purchases,” EY senior economist Lydia Boussour wrote in a note Wednesday.
The National Retail Federation, which released a separate report Monday, saw similar increases in retail sales — but the organization’s president and CEO, Matthew Shay, said the rise “appears to be driven by the uncertainty caused by tariffs,” with consumers “stocking up” ahead of their expected implementation.