Against the backdrop of tariff concerns leading to increased consumer prices, March retail sales saw gains, according to data respectively issued earlier today by the United States Census Bureau of the Department of Commerce and the National Retail Federation (NRF).
Commerce reported that March retail sales, at $734.9 billion, increased 1.4% over February and 4.6% annually. It also noted that total retail sales from January through March posted a 4.1% annual increase.
Retail trade sales increased 1.5% from February to March and were up 4.6% annually, noted Commerce, non-store retailers, including e-commerce, posting a 4.8% annual gain.
NRF reported that March’s retail sales which are based on Census data and exclude automobile dealers, gas stations, and restaurants, increased 0.6% seasonally-adjusted, from February to March, and were up 5.07% on an unadjusted basis annually, compared to a 0.22% decrease month-over-month and a 4.11% annual increase in February.
“Retail sales strengthened in March, supported by continued solid growth in income, lower energy costs and bigger-than-usual tax refunds that all helped support household budgets,” NRF Chief Economist Jack Kleinhenz said. “However, there is no question that the consumer is not feeling great given the confusion of policy announcements from Washington. On-again, off-again rising tariffs and resulting turmoil in the stock market and world economy are clearly impacting consumer concerns about higher prices and future consumer spending growth.”
Earlier this month, the NRF issued its annual retail sales forecast for 2025, in which it said that 2025 retail sales are expected to see annual growth between 2.7%-to-3.7%, coming in between $5.42 trillion-to-$5.48 trillion. In its 2024, forecast, the organization called for a 3.6% annual increase, at $5.29 trillion, and it added that the 2025 forecast matches up with its 10-year pre-pandemic average annual sales growth rate, at 3.6%.
Looking at key retail-focused metrics, NRF noted the following:
- non-store and online sales are expected to head up 7%-to-9% annually to between $1.57 trillion-to-$1.6 trillion (sales for this segment increased 8.1% annually in 20924 to $1.47 trillion);
- GDP growth is expected to come in slightly below 2%, compared to 2.8% in 2024, with NRF observing the 2025 projection is below figures seen in recent years; and
- PCE inflation is expected to be around current levels in the 2.5% range, adding that household balance sheets appear to be in good shape, with delinquencies on auto loans and car payments up but in line with pre-pandemic trends
On an NRF-hosted media on April 2, Kleinhenz said that the U.S. economy performed well in 2024, supported by resilient consumer spending and easing inflation.
“That favorable environment is expected to carry forward as we head further into 2025, but its trajectory is expected to decelerate as job growth moderates and policy uncertainty clouds the economic outlook,” he said.
Kleinhenz explained that public policy shifts have introduced a significant level of unpredictability, raising the probability of a much slower pace of economic activity.
“Any way you look at it, a lot is riding on the consumer,” said Kleinhenz. “While we do expect slower growth, consumer fundamentals remain intact, supported by low unemployment, slow but steady income growth and other household finances. “Consumer spending is not unraveling but consumer confidence is declining, thanks to the lingering headache of inflation and consumers’ anxiety over ever-changing tariff arrangements. But that doesn’t mean there will be an immediate decline in consumer spending.”
Earlier this week, the CNBC/NRF Retail Monitor, powered by Affinity Solutions, reported that core retail sales were up 0.4% seasonally adjusted month over month in March and were up 5.07% unadjusted year over year.
NRF explained that both the Census and Retail Monitor results reflect consumer spending that came after President Donald Trump announced tariffs on China, Canada and Mexico in February but before he announced a minimum 10% tariff on all U.S trading partners on April 2 along with sweeping “reciprocal” tariffs on dozens of countries. It added that the reciprocal tariffs were subsequently suspended for 90 days, “but other tariff announcements have followed, and the situation remains fluid. A survey conducted for NRF in March found 46% of consumers were stocking up on appliances, clothing and other items because they were worried that tariffs would bring higher prices.”
Neil Saunders, Managing Director of GlobalData, observed in a research note that in terms of the wider outlook, regarding retail sales, there is a great deal of uncertainty that is driven mostly by tariffs.
“This takes on two forms,” he wrote. “First, the impact on consumer sentiment, which is, regardless of the actual shape of the tariff policy, mostly negative. Second, the impact on the economics of retail, which is harder to predict due to the state of flux over tariff rates and application. On the former, our general view is that poor sentiment will take the edge off retail growth, and we are already seeing this in terms of consumers putting more consideration into what they buy and how much they spend. However, until tariffs have a tangible impact on prices, the effect will remain somewhat muted. In terms of the economics, there is little doubt that tariffs will be inflationary. Paradoxically, this may actually make retail sales numbers look stronger as it will push up growth, but it will be deleterious on underlying volumes as consumers do not have the capacity to cope with further substantial price hikes.”
