The March U.S. retail sales report
The March U.S. retail sales report blew past estimates with gains of 1.6% for the headline and 1.2% ex-autos, after small upward revisions thanks to a big boost for service station sales. The huge March retail sales gains have mostly reversed the out-sized sales pull-back of December, though an average increase over the four months of a still restrained 0.1% suggests some further sales catch-up in April. Late refunds may partly explain the delayed bounce, with big March sales lifts from a 5.7% vehicle sales pop and a 6.5% CPI gasoline price increase. Today's report has greatly diminished the "hard data" support for the market's pessimistic growth outlook from December, and analysts now have a growth updraft into the start of Q2. Analysts raised our Q1 GDP growth estimate to 2.4% from 2.2%, and still expect 3.0% growth in Q2, as the savings rate rapidly unwinds the December surge. Analysts expect the savings rate to drop from the 3-year high of 7.7% in December that was last seen in January of 2016 to 7.4% in January, an estimated 7.1% in February, and an estimated 6.7% in March. Analysts expect "real" consumption growth of 1.3% (was 1.1%) in Q1 and 3.1% (was 2.9%) in Q2. Analysts assume personal consumption expenditures (PCE) gains of 0.8% (was 0.6%) in nominal terms and 0.4% (was 0.2%) in "real" terms, with March PCE chain price gains of 0.4% overall and 0.1% for the "core" that match the March CPI gains.