American consumers continued to front-run tariffs in March, with retail sales posting their strongest monthly gain since 2023.
Headline retail sales rose by 1.4% in March, matching lofty market expectations. The increase was largely fueled by strong demand for autos and construction materials—signaling a clear shift in consumer behavior as buyers moved to lock in purchases ahead of expected tariff hikes.
Crucially, the control group—which strips out volatile components like autos, gas and building materials, and serves as a better proxy for gross domestic product—also showed impressive strength.
The control group rose by 0.6% month-over-month and by 3.5% on a three-month annualized basis. This suggests resilient underlying consumer demand and offered a potential counterweight to concerns about slowing economic momentum.
Indeed, many forecasters had downgraded their GDP estimates for the first quarter into negative territory, citing weak spending. But March’s robust retail performance may prompt some to revisit those projections.
Still, uncertainty lingers: It’s not yet clear whether the retail surge was offset by a corresponding rise in imports. March’s trade data—which will be released one day before the first GDP estimate—is likely to provide more clarity.
Read more of RSM’s insights on the economy and the middle market.
While consumer sentiment has plunged to multiyear lows amid growing anxiety over trade policy, falling gasoline and commodity prices have helped cushion the blow. That’s freeing up room in household budgets for discretionary spending—for now.
Out of 13 categories, 11 posted increases on the month. Sporting goods rose by 2.4%, followed by restaurant sales, which increased by 1.8%. Electronics, clothing and health personal care also registered growth.
But we believe this window may be short-lived. With the bulk of new tariffs set to take effect in April and policy uncertainty remaining high, consumers could soon shift into wait-and-see mode, pulling back on spending as risks mount.
