U.S. retail sales surged 1.7% in March compared to February, marking the largest monthly gain in three years, according to the U.S. Census Bureau. The increase was largely driven by a 15.5% spike in gasoline station sales, as the ongoing conflict with Iran disrupted global oil supplies and pushed gas prices to their highest levels since 2022. Excluding gas stations, retail sales rose just 0.6%, indicating more modest growth in other sectors.
Core retail sales, which exclude automobiles, gasoline, building materials, and food services, increased 0.7% in March, suggesting broader consumer resilience. Department stores saw a 4.2% rise, while furniture and home furnishings retailers gained 2.2%. Online sales climbed 1.0% from February and were up 10.1% year-over-year. Restaurants, a discretionary spending category, recorded a modest 0.1% gain.
Economists attribute the spending surge to a combination of factors, including larger-than-usual tax refunds from recent policy changes, low unemployment, and strong wage growth. However, concerns remain about the long-term impact of rising fuel costs on consumer budgets. Heather Long, chief economist at Navy Federal Credit Union, noted that while the overall consumer remains healthy, the muted restaurant sales could signal early signs of financial strain.
The Iran war, which began on February 28, has significantly impacted global oil markets, with the Strait of Hormuz disruption cutting off a fifth of the world’s oil supply. This has led to a 24.1% increase in retail gasoline prices in March, raising concerns about inflation and its broader economic effects. Despite these challenges, consumer spending has remained robust, with year-over-year sales up 4% overall.