Retail sales report will be a litmus test of US consumers’ health. The March FOMC minutes showed a diverse set of views within the Committee regarding the policy outlook. However, the meeting took place before the weak March payrolls release. Accumulating evidence of a soft quarter of activity for the US economy have resulted in early estimates of Q1 GDP being gradually lowered, with median consensus estimates pointing to annualised growth of just 1.4%. However, with poor winter weather conditions thought to have played a significant role in the slowdown, the coming week’s retail sales report for March is expected to provide a ‘less-distorted’ picture of the strength of domestic consumption, the principle recent driver of growth. According to Lloyds Bank – “A combination of milder weather, rising real household incomes and firmer saving rates are expected to have provided a supportive backdrop for retail activity last month with headline sales expected to have posted a rebound of 0.9%, alleviating fears of a sharper slowdown in activity.”
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