NAM: Monday Economic Report
Fueled by stimulus payments and pent-up demand, consumer spending at retailers jumped 9.8% in March, the largest monthly gain in 10 months. Excluding gasoline and motor vehicle sales, retail spending rose 8.2% in March.
More than anything, the data speak to the increased willingness of Americans to leave their homes—thanks to increased vaccination rates—and to spend much of the additional dollars in their pockets from stimulus checks. That growth should be largely sustained in the coming months, with the U.S. economy expected to continue rebounding very strongly.
Consumer confidence rose from 84.9 in March to 86.5 in April, a 13-month high, according to final data from the University of Michigan and Thomson Reuters, with Americans reflecting on stronger economic and labor market growth.
After falling 3.7% in February, largely on supply chain disruptions and weather, manufacturing production rebounded somewhat in March, rising 2.7%. While challenges continue in the supply chain and with rising costs, the manufacturing sector continues to expand strongly overall, with production down just 2.1% since the COVID-19 pandemic began in February 2020. Output in the sector would be expected to return to pre-pandemic levels by the third quarter of this year.
Manufacturing activity expanded robustly in both the New York and Philadelphia Federal Reserve Bank districts, but respondents continued to cite supply chain challenges and rapidly rising costs as concerns. Respondents in both regions felt very positive in their outlook for the next six months.
Consumer prices rose 0.6% in March, the fastest monthly pace since August 2012, fueled in part by sharply higher gasoline prices. Core inflation increased 0.3% for the month. The consumer price index has risen 2.6% year-over-year, the fastest rate since August 2018, but excluding food and energy costs, consumer inflation has increased a more modest 1.6% over the past 12 months.
New residential construction rebounded in March, jumping 19.4% to an annualized 1,739,000 units, the fastest pace since June 2006, after pulling back in February largely on weather issues. New housing starts have grown 11.0% over the past 13 months, with permits rising 20.6% over that time frame.
As such, the housing market remains a bright spot. Builders complain about sharply higher construction costs, worker shortages and a lack of available lots, but they remain upbeat in their outlook for sales over the next six months.
Initial unemployment claims totaled 576,000 for the week ending April 10, the lowest since the week of March 14, 2020.