The war in Iran apparently produced some unexected results last month.
With the war producing a hike in oil prices that translated into higher gas prices, U.S. retail sales increased more than expected in March and led to a record surge in receipts at service stations, while tax refunds underpinned spending elsewhere, according to a report from Reuters.
A report from the Commerce Department on Tuesday prompted economists to upgrade their economic growth estimates for the first quarter. The U.S.-Israel war with Iran is, however, casting a shadow over the economic outlook.
According to the outlet, economists expected a considerable slowdown in growth this quarter as the tailwind from tax refunds faded and more expensive gasoline pulled spending away from other categories.
“Households remain resilient for now, potentially leaning on tax refunds and broader savings to keep on spending in the face of the latest price squeeze,” James McCann, senior economist for investment strategy at Edward Jones, told Reuters.
According to the Commerce Department Census Bureau report, retail sales jumped 1.7% last month, the largest rise in a year, after an upwardly revised 0.7% gain in February. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, would advance 1.4% after a previously reported 0.6% increase in February. Estimates ranged from as high as a 2.0% increase to as low as a 0.4% gain.
Sales advanced 4.0% on a year-over-year basis in March. Economists estimated sales increased only 0.7% from a year ago when adjusted for inflation. The Census Bureau has now caught up on releasing monthly retail sales data after delays caused by last year’s government shutdown. The retail sales report for April will be released on time next month, Reuters reported.
