US retail sales rose more than expected in March, led by surging auto purchases and broad-based gains, signaling resilient consumer demand despite growing concerns over tariffs and economic uncertainty.
Retail sales increased 1.4% in March, following a modest rise in February and a decline in January.
Analysts said the strength was not solely due to pre-emptive buying ahead of tariffs but pointed to solid underlying demand.
“The March retail sales report met expectations on the headline and exceeded expectations after accounting for upward revisions to prior data and a composition of spending that reflects more than just a pre-tariff splurge,” Wells Fargo economists wrote. “The upshot is that Q1 PCE is shaping up to be halfway decent.”
Auto sales jumped 5.3%, the strongest pace since the post-pandemic boom, while spending at building material and garden stores rose 3.3%. Restaurant sales also climbed 1.8%, reflecting steady discretionary spending.
“Consumers are playing a bit of beat-the-clock with tariffs, but there is more to the story here,” Wells Fargo noted. “Consumer spending is managing to avoid the gravitational pull of all the negative dynamics that might otherwise hold it back.”
Steady consumption
Control group sales—a key input for GDP that excludes autos, gas, building materials and food services—rose 0.4% in March, after a revised 1.3% increase in February, pointing to steady goods consumption.
Jeffrey Roach, chief economist at LPL Financial, said inflation-adjusted retail sales fell slightly over the past three months. “If the economy can hold on during this period of tariff uncertainty, we could see some relief when the Fed eventually loosens monetary policy.”
Some analysts warned that the retail strength may be temporary. “Consumers are front-loading their purchases and we may be seeing an artificial bump in sales,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Zaccarelli added that tariff policy uncertainty may be more damaging than actual tariffs. “At this point, it seems unlikely that we will end 2025 with lower tariffs than we started.”
Wells Fargo cautioned that if demand has been pulled forward, weaker spending could follow. “A household that bought a car in March likely isn't buying another one in May,” the firm noted.