A recent report released by the National Association of Federal Credit Unions revealed sequester-related government spending cuts, as well as a decrease in auto and gas sales, led to an overall decline in March retail sales.
On Friday, data from the U.S. Census Bureau showed a 0.4 percent decline in March retail sales, while February’s retail sales were revised to reflect a one percent increase. Core retail sales, which exclude light vehicles and gasoline, fell 0.1 percent in March, and auto and gasoline sales fell 1.2 percent.
NAFCU staff economist Curt Long said a drop-off in retail sales coincided with a decrease in consumer confidence.
“Consumers are also adjusting to lower take-home pay following the January expiration of the payroll tax cut,” Long said.
Retail sales increase in March by 2.8 percent year-over-year and by 4.4 percent year-over-year in February. Core retail sales increased 2.4 percent year-over-year, while auto and gas sales rose 3.8 percent.
“Reduced government spending due to the sequestration is just beginning to impact the economy,” Long said. “That is expected to be a drag on sales as workers are furloughed or laid off in the coming months.”