Worries about an economic slowdown are running wild on Wall Street. Despite concerns about inflation, higher interest rates from the Federal Reserve, supply chain issues and geopolitical turmoil due to Russia’s invasion of Ukraine and Covid outbreaks in China, American consumers continue to do what they do best: shop until they drop.
Retail sales rose at a healthy 0.5% clip in March when compared to February and were up 6.9% from March 2021. Economists are expecting that the strong trend for retail lasted into April as well. The government will report retail sales figures for April on Tuesday. Forecasts are calling for a 0.7% jump from March levels.
In other words, experts don’t think negative headlines and recent market turmoil slowed down consumer spending. “We are yet to see a looming recession show up in hard economic data,” said Mark Holman, partner and portfolio manager with TwentyFour Asset Management in a blog post, adding that “retail sales have held firm.”
The takeaway for investors: Follow what consumers do, not what they say. Weaker consumer sentiment may sound scary, but it’s more important to keep an eye on actual spending as opposed to touchy-feely confidence measures. Leading retailers will also provide more clues about the health of the US shopper when they report earnings later this week. Walmart (WMT), Target (TGT), Home Depot (HD), Lowe’s (LOW), TJX (TJX) and Kohl’s (KSS) are among the top retailers on tap to release first quarter results.