WASHINGTON – The Commerce Department releases retail sales data for March on Tuesday at 8:30 a.m. Eastern.
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GROWTH RETURNS: Economists forecast that retail sales rose 1 percent in March, according to a survey by FactSet.
Retail sales fell in the three prior months, including a 0.6 percent drop in February. Those decreases came in part from plunging gasoline prices, which shrank what Americans spent at the pump. Those savings appear to have been pocketed by Americans rather than spent, which has kept sales elsewhere subdued.
But gas prices have climbed and that has likely led people to spend more on gasoline in March. Despite the month-over-month increase, gas costing $2.39 a gallon is almost a $1.30 cheaper than prices a year ago, according to AAA's Daily Fuel Gauge. That should translate into $700 of gasoline savings compared with last year, according to government estimates.
CAN CHEAP GAS FUEL SPENDING: Still, many Americans remain reluctant to part with the money they are saving. Many have qualms about going on a shopping spree when the wounds from the housing bust and 2008 financial crisis — the most devastating economic downturn in 80 years — are still healing.
In some cases, skeptical consumers are simply awaiting proof that gas prices will stay low. Americans since January have begun to expect inflation to rise, suggesting that many are waiting for gas prices to surge and to cut into whatever they've saved, Deutsche Bank economist Joseph LaVorgna wrote recently.
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Economists also say that the benefits from cheaper gas accrue slowly over time. As a result, changes in behavior are often seen only after three to six months.
The monthly retail sales report is closely watched because it provides the first indication each month of Americans' willingness to spend. Consumer spending drives 70 percent of the economy. Yet retail sales account for only about one-third of spending, with services such as haircuts and Internet connections making up the other two-thirds.
Overall consumer spending ticked up just 0.1 percent in February, the Commerce Department recently reported.
But incomes outpaced that modest increase in spending, rising a solid 0.4 percent in February. Because more Americans were stockpiling their oncomes, the savings rate increased to 5.8 percent of after-tax income, the highest level since December 2012.
Other factors may have also influenced March sales. Warmer weather may have provided a boost for auto dealers after several months of enduring cold winter weather. In addition, Easter was 15 days earlier this year compared to 2014, which may have pulled up spending.