U.S. retail sales in March popped higher, while February revisions were positive.
After hibernating this winter, U.S. consumers appear to be opening their wallets again. March retail sales data were strong across the board – the only exceptions were spending on gasoline and electronics, which contracted month-over-month.
Fundamentals for consumer spending remain solid: the consumer deleveraging cycle is very mature, policy uncertainty has finally subsided, business confidence is improving, and the wealth effect is still positive, despite equity market volatility in recent weeks. Most importantly, job prospects are gradually improving and this is beginning to be reflected in overall consumer confidence, a pre-condition for more vigorous spending.
Overall, we expect the U.S. economy is on track for 3% growth or better over the next year.