Americans continued to spend in March, even amid rising food, gasoline and other commodity prices, which were exacerbated by The escalation of Russia’s war with Ukraine.
Retail sales rose 0.5% after a revised 0.8% jump from January to February. Spending has been driven by earnings, solid hiring and more money in bank accounts. The 4.9% increase in January was the biggest jump in spending since March 2021, when U.S. households received a final federal stimulus check of $ 1,400.
- Product shortages and rising prices reveal the fragility of the U.S. supply chain
The Commerce Department reported Thursday that general merchandise stores increased business by 5.4%, while sales at clothing stores increased 2.6%. Restaurant sales increased 1%. Motor vehicle sales fell 1.9%, and volatile out-of-store retail sales, or online sales, fell sharply to 6.4%.
Retailers are closely monitoring Russia’s war with Ukraine to see if it will erode buyers’ confidence and worsen inflation. The conflict has already limited the supply of wheat, vegetable oils and electronic components such as chips. It has also pushed up already high fertilizer prices, made it even harder to find scarce supplies and squeezed farmers, especially in the developing world. In addition to the Russian invasion, rising COVID-19 cases and renewed restrictions in China could worsen supply chain problems.
"Global consumption is likely to have gained momentum last month from a new solid increase in service consumption," said Andrew Hunter, a senior US economist at Capital Economics, in a research note.
“While this would still leave first quarter growth as a whole close to 3.5% annualized, it provides a weak starting point for the second quarter,” he added.
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