Directory
- 2020
- June
- July
- September
- November
- December
- 2021
- January
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
- February
- Long Term Employment Shifts Caused by the Pandemic
- Earnings Provide Positive Surprise Despite Pandemic
- Renewable Energy Under Fire in Texas
- Yellen Aims for Full Employment
- Minimum Wage Research in the Spotlight as a Hike Looks Inevitable
- Non-Residential Construction Soft in the Pandemic Economy
- March
- Views on Interest Rates and the Move in Treasury Yields
- Inflation Indicators Healthy but Still on the Rise
- Risky Assets Sell-off Despite Optimistic Economic Outlook
- The Latest on Vaccinations and What it Means for Growth
- April
- May
- Highlights of the Fed's "Economic Well-Being of U.S. Households in 2020" Report
- Relative Factors and Forward Change in Federal Funds Rate
- Can Wage Growth Keep Up With Inflation?
- June
- July
- August
- With That, We Carry On
- Supply Pressures Looking to Peak
- Cars are Still Expensive, Workers are Still Needed
- Recovery Continues, but Delta Looms
- September
- Fed Eyes Tapering While China Sees a Setback
- Review the Fed Previews
- No Tapering Yet
- Labor Day on Labor Day
- October
- Delayed or Disappearing Growth?
- Supply and Demand Mismatch will be Evident during the Holiday Shopping Season
- Workers Find Leverage in a Tight Labor Market
- Cautiously Optimistic
- Sour Expectations Take Down the Market
- November
- Q3 Earnings Were Surprisingly Good
- Inflation Weights on Bonds and Consumer Sentiment
- FOMC Tapers While Trade and Employment Flash Mixed Signals
- December
- 2022
- January
- Inflation is Getting Broader, Not Cooler
- Unemployment Insurance During the Pandemic
- A Year of Normalization
- What Will GDP Growth Look Like in 2022?
- February
- March
- April
- May
- June
- August
- Student Loans Targeted by the Biden Administration
- The Chicago Fed Index Reverses in July
- Chinese Economic Data Faltered in July
- Stellar Jobs Report Bucks Recession Fears
- September
- Bank of Japan Punished for Dovish Policy Stance
- Expect 75 Today
- Manufacturing Weakness in Germany has Implications for Euro Area Growth
- October
- 2023
- February
- April
- Q1 GDP Growth Jumps 1.1% on Strong Personal Consumption
- A Strong March Leads to a Surge in Chinese GDP in Q1 2023
- Durable Goods Retail Sales Suffer from High Interest Rates and Wary Consumers
- Choppy GDP Means UK Should Avoid Q1 Recession
- Japanese Consumer Confidence Jumps to Highest Level in Over a Year
- May
Durable Goods Retail Sales Suffer from High Interest Rates and Wary Consumers
Jacob Hess
April 14, 2023
- Retail Sales
Consumer activity continued to be weak in March as a result of a decline in durable goods sales. US retail sales fell -1.0% MoM in March after a -0.2% MoM decline in February. On an annual basis, sales were only up 2.9% YoY. The decline was heavily impacted by contractions in both vehicle and gas station sales. Ex-motor vehicle and gas sales were down at a softer rate of -0.3% MoM and had an improved year-over-year gain of 6.0% YoY. The dismal results were impacted by fewer purchases of big-ticket items like electronics (sales down-2.1% MoM), furniture (sales down -1.2% MoM), and building materials (sales down -2.1% MoM). Each of these categories is now down on a year-over-year basis, including a sharp -10.3% YoY decline in electronics sales (the lowest since 2009 when excluding the pandemic period). Higher interest rates are clearly impacting consumers’ confidence in purchasing expensive items and limiting the ability to easily access or afford credit.

If there were sharp declines in these categories, then where were the gains? The main source of growth came from the sales of nonstore retailers which increased 1.9% MoM in March and are up 12.3% YoY. The increase in this segment represents a jump of over $2 billion in sales which offsets the declines in furniture, electronics, and building materials on the month. Additionally, there was an improvement, albeit slight, in other non-durable and services segments including sporting goods & hobby sales (up 0.2% MoM), health & personal sales (0.3% MoM), and food & drinking services (0.1% MoM). These might include more of your day-to-day purchases that don’t take a chunk out of finances when purchased and, most likely, consumers would not need to access credit when shopping for items in these segments.
Durable goods purchases tend to take the lead in indicating where the economy is going. Purchases for these types of goods are the first to decline when a recession is on the horizon as consumers start to consider their finances more and tighten their purse strings. This is especially true if they don’t have access to easy credit. Interest rates on credit card plans at commercial banks are up to 20.1% as of February 2023, just before the pandemic, this averaged around 15%. We should be set for more declines in sales going forward as rates will probably stay high for the rest of the year, and savings and checkings accounts are still recovering from inflation.