Re­tail sales re­bound in March

But shop­pers re­frain from splurg­ing de­spite lower gas prices and in­creas­ing wages.

Los Angeles Times - - BUSINESS - By Shan Li and Sa­man­tha Ma­sunaga

Amer­i­cans re­mained cau­tious about shop­ping in March, fail­ing to splurge — even as lower gas prices put more money in their wal­lets.

Re­tail sales climbed 0.9% last month from Fe­bru­ary to $441.4 bil­lion, the Com­merce Depart­ment said Tues­day. Sales jumped 1.3% from March of last year.

The lift in spend­ing was a wel­come sign af­ter a win­ter of sales de­clines but fell be­low econ­o­mists’ es­ti­mates of a 1% or higher jump in March from Fe­bru­ary.

“2014 was a hard year,” said Sandy Sim­mons, 35. “I feel like the money is flow­ing a lit­tle eas­ier” now.

Shop­ping at the Fi­gat7th mall in down­town L.A., the Mid-City res­i­dent said she plans to in­dulge more this year. Sim­mons re­cently landed a job as a sales­woman at an e-com­merce web­site and “I’ve been spend­ing,” she said with a laugh.

Even so, some an­a­lysts said con­sumers are still keep­ing a tight rein on spend­ing even as wages are slowly edg­ing up.

“It’s a nice re­bound,” said Lind­sey Piegza, chief econ­o­mist for Sterne Agee. “But this mod­est re­bound fol­lows three con­sec­u­tive months of neg­a­tive re­tail sales. It doesn’t hit a great tone for ro­bust con­sumer spend­ing in the sec­ond quar­ter.”

Econ­o­mists are split over how big of an ef­fect harsh weather, which pum­meled many parts of the coun­try, sapped peo­ple’s de­sire to shop. Some said pent-up de­mand would help lift spend­ing once tem­per­a­tures warm up, but oth­ers said con­sumers would con­tinue sock­ing away their pen­nies to pay down debt in­stead of shop­ping.

“Con­sumers have been re­luc­tant spenders so far,” said Sung Won Sohn, an econ­o­mist at Cal State Chan­nel Is­lands. “Much of the wind­fall from lower gaso­line prices has been saved.”

Con­sumer spend­ing makes up more than twothirds of eco­nomic out­put, mak­ing re­tail sales a strong gauge of the coun­try’s eco­nomic health. Slug­gish re­tail sales in re­cent months also re­flects a slower pace of growth in the over­all econ­omy.

In March, em­ploy­ers added 126,000 net new jobs, the weak­est show­ing in more than a year, the La­bor Depart­ment said this month. The av­er­age hourly pay of work­ers im­proved last month, but the av­er­age num­ber of hours worked fell. A stronger dollar has also helped put the squeeze on ex­ports.

The In­ter­na­tional Mon­e­tary Fund said Tues­day that global eco­nomic growth would con­tinue at a slow pace and vary widely around the world. The IMF out­look also said the U.S. econ­omy would ex­pand 3.1% this year, a down­grade from a pre­vi­ous fore­cast of 3.6%.

Fur­ther signs of slow­ing growth could per­suade the Fed­eral Re­serve to de­lay plans to raise in­ter­est rates, which some ex­pect as early as June.

“We are go­ing to see pos­i­tive growth, but it will be very mod­est growth” this year, Piegza said. She fore­casted that the U.S. econ­omy would climb 1% to 1.5% in the first half of the year, and then ac­cel­er­ate slightly to 2% in the sec­ond half.

But in March, con­sumers buoyed by tax re­funds streamed into malls for the Easter hol­i­day and early spring shop­ping.

Auto and parts deal­ers posted 2.7% growth from Fe­bru­ary. Strip­ping away the cat­e­gory, which can be volatile, re­tail sales climbed 0.4% in March.

Nine of 13 cat­e­gories showed growth. Build­ing ma­te­rial and gar­den sup­plies saw a 2.1% rise, a sign that home­own­ers are spruc­ing up for spring. Fur­ni­ture stores saw a jump of 1.4%. Cloth­ing and ac­ces­sories edged up 1.2%.

Gas sta­tions fell 0.6%; a con­tin­ued drop in prices at the pump should con­tinue to be a wind­fall for con­sumers. This sum­mer, driv­ers are pre­dicted to en­joy the low­est sea­sonal gas prices in six years, the En­ergy In­for­ma­tion Ad­min­is­tra­tion said.

At the Ci­tyTar­get store in down­town L.A., Erica Wash­ing­ton said any­thing she saves from fill­ing up her car gets quickly spent to off­set ris­ing prices in other ar­eas, such as gro­ceries.

Wash­ing­ton, who works in tech sup­port for the city of Los An­ge­les, said she tries to find ways to trim costs even when splurg­ing, such as us­ing coupons for din­ners out.

“Ev­ery­thing is so much more ex­pen­sive now,” the Hawthorne res­i­dent said. “I’m just try­ing to make my pay­check stretch a lit­tle fur­ther.”

Spencer Platt Getty Images

A BOOST in con­sumer spend­ing last month was a wel­come sign af­ter a win­ter of re­tail sales de­clines. Above, a shop­per ex­its a store in New York in March.

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