April proved to be another head-scratching month for the nation’s retailers, who saw flat sales last month during a period when economists expected a spending snap-back.
Overall retail sales were unchanged in April, the Commerce Department reported Wednesday, revising upward its earlier March estimate of 0.9 percent growth to 1.1 percent. It’s the opposite of what was expected coming out of a harsh winter, which had suggested consumers making up for lost time.
“Retail sales disappointed,” Jack Kleinhenz, chief economist of the National Retail Federation, said bluntly, calling “anemic” the 0.9 percent year-over-year growth in consumer spending.
“Consumers are the key driver of the economy but they can spend more! Employment gains, wage and salary increases and greater savings are all fuel for the consumer spending engine to be tapped for the rest of the year,” Kleinhenz said in an analysis of retail numbers.
Economists are befuddled about why consumers aren’t spending more given a number of other positive economic indicators.
“We remain puzzled by the softness in retail sales given the gains in employment, real incomes from lower energy prices, and wealth, but we continue to look for consumer spending to pick up this year,” said Gus Faucher, a senior economist with PNC Financial Services in Pittsburgh.
PNC economists forecast inflation-adjusted growth in consumer spending of 3.1 percent in 2015, after 2.5 percent growth in 2014.
“The big drop in gasoline prices should support spending in other areas; sales at restaurants have been strong lately, probably for this reason,” Faucher said. “Low interest rates are supporting purchases of big-ticket items.”