Consumer Spending Surged in March - WSJ Your Money Briefing

Summary4 min read

WSJ Your Money Briefing – "Consumer Spending Surged in March"

Date: April 19, 2019
Host: Charlie Turner (B)
Guest: Sharon Nunn, Wall Street Journal reporter (C)
Duration: ~5:30

Episode Overview

This episode dives into the surprisingly strong U.S. retail sales report for March 2019. Host Charlie Turner interviews WSJ reporter Sharon Nunn to explore the reasons behind the surge in consumer spending, trends across different retail categories, and what the data suggests about the future of the U.S. economy. The episode emphasizes the relationship between wages, unemployment, and consumer confidence, providing insights valuable to anyone tracking personal finance and economic health.

Key Discussion Points & Insights

1. Retail Sales Surge in March

March Jump: The Commerce Department reported a 1.6% month-over-month increase in retail sales, a significant rebound from February's decline.
- Quote (Sharon Nunn, 02:28): “Sales had been so weak and so generally when we have a pretty big drop or a kind of consistent lull, there's usually at some point a pretty, and that really seems to be what happened in March.”
Economic Fundamentals: Robust job growth, low unemployment, and strong wage gains are fueling consumer optimism and spending.
- Quote (Sharon Nunn, 02:45): "We have a constant churning of jobs every month. The unemployment rate is low. We're seeing wages grow at a pretty fast pace, which, you know, really supports good consumer spending, especially while inflation is low."

2. Where Did Consumers Spend?

Broad-Based Gains: The spending increase wasn’t confined to a single sector.
- Significant growth seen at furniture and clothing stores—among the fastest paces in almost a year.
- Increased outlays at gas stations (reflecting higher prices) and vehicle purchases also contributed.
- Only category with a dip: sporting goods, books, and hobby stores.
- Quote (Sharon Nunn, 03:08): “It was pretty broad based, which is always really good for economists and analysts to hear.”

3. Impact of Gas & Auto Sales

Not Driving the Entire Story: Even excluding gas and vehicle sales, March retail numbers were strong.
- Exchange (Charlie Turner & Sharon Nunn, 03:38–03:44):
  - Turner: "Did gas and car purchases really boost the number? The number was still strong regardless, wasn't it?"
  - Nunn: "Yes, they certainly boosted it. But even if people just happened to not spend any money on cars or gas stations in March, retail sales were still strong regardless."

4. Choppiness in Retail Sales Trend

Recent Volatility: Retail sales have seesawed in recent months—down in December, up in January, down again in February.
- Quote (Charlie Turner, 03:59): "Retail sales have been quite choppy the past few months. Down in December, up in January, down again in February. What's going on here?"
Causes of Volatility:
- Government Shutdown: Direct impact on federal employees’ income and broader consumer sentiment.
  - Quote (Sharon Nunn, 04:08): “The partial government shutdown… certainly probably impacted economic output… if they're not receiving paychecks, then they're not spending.”
- Delayed Tax Refunds: Both timing disruptions due to new tax laws and effects from the shutdown.
  - Most people are receiving similar refund amounts, but payouts were delayed.

5. Economic Outlook for Consumer Spending

Optimism for Coming Months: The episode closes with a positive outlook, citing the “perfect storm” for ongoing consumer spending: low unemployment, wage growth, and strong consumer sentiment.
- Quote (Sharon Nunn, 05:02): “At this point there's pretty much no reason to believe otherwise. We have a really low unemployment rate, wages are growing rapidly, consumer sentiment is high. That's pretty much the perfect storm for good consumer spending going forward.”
Broader Forecast: Economists expect stronger economic growth in the second quarter as these consumer trends continue.

Notable Quotes & Memorable Moments

On the rebound:

“Generally when we have a pretty big drop or a kind of consistent lull, there's usually at some point a pretty... and that really seems to be what happened in March.”
— Sharon Nunn (02:28)
On economic conditions:

“We have a constant churning of jobs every month. The unemployment rate is low. We're seeing wages grow at a pretty fast pace, which, you know, really supports good consumer spending, especially while inflation is low.”
— Sharon Nunn (02:45)
On sector performance:

“It was pretty broad based, which is always really good for economists and analysts to hear.”
— Sharon Nunn (03:08)
On the outlook:

“That's pretty much the perfect storm for good consumer spending going forward.”
— Sharon Nunn (05:06)

Timestamps for Key Segments

00:21–01:45: News headlines & retail sales report introduction
02:28–03:03: Reasons behind March retail sales growth
03:08–03:38: Breakdown of spending categories and trends
03:44–03:59: Impact of gas and vehicle purchases
03:59–04:56: Retail sales volatility, government shutdown, and tax refund delays
05:02–05:23: Economic outlook for consumer spending

This episode offers clear, upbeat analysis focused on the strength of the U.S. consumer and broader economic signals as of early 2019, emphasizing why personal finance observers and investors should remain attentive to these trends.

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Transcript15 lines

[00:01]
A
Deal replaces fragmented Payroll vendors with one global system. No third parties, hire, manage and pay teams in 150 countries. Operate like a local everywhere. Visit d eel.com WSJ.
[00:21]
B
With your money briefing. I'm Charlie Turner in New York for the Wall Street Journal. Good news on the economy. Consumers are in a spending mood. We'll talk with the Wall Street Journal's Sharon Nunn in a moment. Some money Headlines Investors in Sprint and T Mobile have been praying for a merger, but the Wall Street Journal says they may be disappointed. The Journal had reported that the two wireless carriers planned merger is unlikely to be approved by the Justice Department. The bottom line seems to be that regulators are skeptical about the claim that the market would be more competitive with three players rather than the current four. A former Justice Department lawyer says he thinks the combination will only lead to higher prices and reduced quality. Sprint and T Mobile have appealed to the Trump administration's eagerness to beat China in the race for high speed 5G mobile technology. But critics say 5G may have little relevance in antitrust matters. Shares of online image board Pinterest and video conferencing firm Zoom Video both soared in their trading debuts Thursday. The performance of the two will set the stage for the IPO market going forward. It's also important for Uber Technologies, expected to be one of the biggest IPOs ever that is set to begin trading in early May. It follows the recent high profile wobble of Uber rival Lyft, which has struggled after a strong trading debut. Investors said they were attracted to Pinterest's shares during the roadshow, won over by the company's strong growth. While it isn't yet profitable, annual losses are narrowing. Pinterest's revenue is rising, and in the currently low interest rate environment, many fund managers are happy to scoop up fast growing companies. Still ahead, the latest sign of strong consumer demand. The latest retail sales report from the government indicates consumers are in a spending mood. The Commerce Department said retail sales jumped 1.6% in March from a month earlier. It followed a sales decline in February. Which categories led the gains and how did tax refunds figure into the numbers? We're joined by Wall Street Journal reporter Sharon Nunn, who's in Washington. Sharon, this report was a lot stronger than expected. Why the big jump in retail sales?
[02:28]
C
Yeah, that's a good question. Partially because sales had been so weak and so generally when we have a pretty big drop or a kind of consistent lull, there's usually at some point a pretty and that really seems to be what happened in March. But, you know, we have a general, you know, our economic outlook is pretty good at this point. We have a constant churning of jobs every month. The unemployment rate is low. We're seeing wages grow at a pretty fast pace, which, you know, really supports good consumer spending, especially while inflation is low. So it makes those paychecks go further.
[03:04]
B
What kind of stores did consumers spend the most in during March?
[03:09]
C
Yeah, it was pretty broad based, which is always really good for economists and analysts to hear. We saw a lot of spending on lightweight vehicles at gas stations because gas prices went up. But more broadly, we saw a lot of spending at furniture shops and clothing stores. Those grew at some of the fastest paces in almost a year. The only category that we saw a dip in was sporting goods, books and hobby stores. So think of your Barnes and Nobles of the World.
[03:39]
B
Did gas and car purchases really boost the number? The number was still strong regardless, wasn't it?
[03:44]
C
Yes, they certainly boosted it. But even if people just happened to not spend any money on cars or gas stations in March, retail sales were still strong regardless. But yes, certainly consumers bought vehicles. They spent more at gas stations last month.
[03:59]
B
Now, if I'm reading this correctly, it looks like retail sales have been quite choppy the past few months. Down in December, up in January, down again in February. What's going on here?
[04:08]
C
So there are certainly a few things here, and it's really hard to pinpoint exactly one cause, but there was the partial government shutdown, which certainly probably impacted economic output as government employees weren't, you know, doing the things they typically do. And of course, if they're not receiving paychecks, then they're not spending. And maybe consumers who aren't government workers decide they're maybe not going to make a big purchase because they don't know what's happening with the government shutdown. And maybe they're a little nervous. But in addition to that, the tax refund situation this year has been a little bit different. Overall. People are receiving generally the same amount. They have been the same amount of people are receiving tax refunds as they had, but it's a bit delayed. So maybe that could also explain some of the weakness. Tax refunds were a bit delayed this year because of the new tax law changes and the shutdown.
[04:57]
B
So to reiterate, can we expect that the strong economy will continue to support consumer spending in the months ahead?
[05:03]
C
Oh, I mean, at this point there's pretty much no reason to believe otherwise. We have a really low unemployment rate, wages are growing rapidly, consumer sentiment is high. That's pretty much the perfect storm for good consumer spending going forward. And I think economists more broadly expect economic growth to pick back up in the second quarter because of that.
[05:24]
B
Wall Street Journal reporter Sharon Nunn joining us from Washington. Thanks, Sharon.
[05:29]
C
Thank you.
[05:29]
B
And that's your money briefing. I'm Charlie Turner in New York at the Wall Street Journal.
[05:34]
A
Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and Pay teams in 150plus countries, operate like a local everywhere. Visit d e e l.com WSJ.