Retail sales are up 2.9 percent annually, but when adjusting for elevated inflation sales are actually down 2 percent annually — meaning Americans are buying fewer products.
Spending at gas stations, general stores, electronics retailers, car dealerships and furniture stores saw significant drops. Online spending was the only area where sales picked up, rising 1.9 percent in March.
The data will only reinforce predictions of a recession later this year. Consumers have been dealing with sky-high prices for years, and it has eaten into their finances.
“A downshift in spending attitudes should come as no surprise,” EY-Parthenon senior economist Lydia Boussour said in a note. “The cumulative effect of historically high inflation, rising interest rates, and reduced access to credit is already taking a toll on consumers’ ability and willingness to spend.”
National Retail Federation chief economist Jack Kleinhenz made the case that the sector will still see sales growth this year, attributing the drop in part to easing inflation.
“Keep in mind that households tend to shop less during the post-holiday season. In addition, tax refunds typically contribute to spending at this time of year but are smaller this year than last,” Kleinhenz said in a statement.
