There are signs that consumers are reining in their spending, as Retail Sales were unchanged from March to April. Sales in March were also revised downward from the originally reported 0.7% gain to a 0.6% gain when compared to February.
What’s the bottom line? The pause in spending last month was a miss on estimates, as forecasters had predicted a 0.4% gain. But with credit card balances reaching $1.12 trillion at the end of the first quarter (per the New York Fed’s Quarterly Report on Household Debt and Credit) and pandemic-era savings fully spent as of March 2024 per San Francisco Fed analysts, a slowdown in discretionary spending is also not surprising.
The Fed will be closely watching future Retail Sales reports, as the strength of our economy will also impact their monetary policy decisions this year.