Retail spending is heating up, as the tenaciously terrible winter loosens its grip on much of the country.
Warmer weather coaxed homebound shoppers out to the malls and unleashed a rebound in sales activity. Retail sales surprised to the upside in March, rising 1.1 percent on the March tally, the largest gain since September 2012.
February sales were also revised upward to 0.7 percent, doubling the originally reported figure. Yearly growth was 3.8 percent, an amount that should be accretive to GDP.
Auto dealers enjoyed a 9.5-percent advance year-over-year, as would-be car buyers preferred to hold off and spare their new ride from the January and February snow, salt and potholes.
Building materials, those home improvement items that Home Depot and Lowe’s sells, are basking in 5.7 percent year-over-year sales gains.
All of this is shaping up for continued growth and potential reacceleration of the U.S. economy.
Consumer confidence was the one wildcard that had been lagging retail purchases, but it is catching up.
While there has been a gap between retail activity and confidence, the two are converging, perhaps at a stable level of 2- to 4-percent retail sales growth. That’s consistent with the kind of economy we are all coming to know and embrace: a low growth, gently improving environment.
Jack Ablin is chief investment officer of BMO Private Bank, a part of the BMO Financial Group.
