U.S. Shoppers Ignore the Noise | S3 E140 | 04-22-26

The U.S. consumer continues to show surprising strength. 

In today’s Markets with Megan, Megan Horneman breaks down the March retail sales report and explains why consumer spending came in much stronger than expected. Headline retail sales rose 1.7% in March, marking the biggest monthly increase in a year, while core measures also pointed to broad-based strength.

Megan walks through what was driving the spending, from gasoline and autos to more discretionary categories like furniture, electronics, dining out, and online shopping. She also explains why this report matters, what tax refunds may have contributed, and why weak consumer sentiment still is not showing up in actual spending behavior.

Key topics covered:

March retail sales data
Core retail sales strength
Consumer resilience despite high gas prices
Discretionary spending trends
Tax refunds and spending activity
Consumer sentiment vs. actual behavior

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#MarketsWithMegan #RetailSales #ConsumerSpending #Economy #USEconomy #EconomicData #MarketCommentary #Investing #RetailData #ConsumerStrength #Inflation #TaxRefunds #MarketInsights

https://youtu.be/uhzk-RZyoFk

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Transcript

Consumer Strength Sets The Stage

Megan Horneman 0:00

There is not much that can stop the U.S. consumer, according to the March retail sales report. It's Wednesday, April the 22nd, and this is Markets with Megan. If you like this podcast, you can subscribe, hit the alarm bell, share it with any of your friends, your colleagues, family members, anybody who's interested in what's really going on with the economy. We get regular economic data that gives us insight into the direction that we're going. And today we're going to focus on the consumer. So let's dig right in.

Retail Sales Jump Past Forecasts

Megan Horneman 0:29

The March retail sales report was much better than was anticipated. On a month-over-month basis, the uh retail sales at the headline level, so that includes all items, that rose 1.7% for just the month of March. It was the biggest monthly increase in 12 months. The expectation was that we would see a 1.4% increase. Now, that headline number was primarily due to about a 15% increase in spending at gasoline stations. And sometimes when we look at this, we will

What Changes When You Exclude Gas

Megan Horneman 1:04

X out volatile items because that headline number may be misrepresenting the strength in the consumer. But when we strip out items like autos, like gasoline, building materials, food, still very strong numbers. So let's look at just Xing out autos and gas. Retail sales rose 0.6%. The expectation was for them to rise 0.3. And when you X out food, gas, building materials, autos, um the it rose 0.7%. It was the biggest rise since August of 2025, 25. And the expectation was only for a 0.2% rise.

Discretionary Spending Leads The Month

Megan Horneman 1:45

Now let's look within the details at what consumers are spending money on. You're seeing very discretionary spending in the month of March, meaning that some of the things like furniture, electronics, uh, going out to eat, spending money on the internet, these were all big drivers. Furniture spending rose the most most since December of 2024, as did spending on food and beverages. So this is a strong report. There's not much that I can say negative about this report.

Tax Refunds Fuel The Surprise

Megan Horneman 2:19

But why did the consumer spend so much in a month where we were dealing with the war in Iran and sky-high gasoline prices? Well, don't forget that we have tax refunds. We got a lot of tax refunds in the month of March, and um tax season is now officially over, but we did see a very big increase on an annual basis in tax refunds. So that money looks to have been spent. Consumers are looking like these spikes in gasoline are temporary because they were spending quite a bit in the month of March.

Inflation And Sentiment Don’t Match

Megan Horneman 2:50

The last thing I'll say about this report is remember, it is not inflation adjusted. Um, so uh what we will do is we'll look for it's some more indication on the consumer, the health of the consumer. This report does not correlate with the really weak consumer sentiment that we got because weak consumer sentiment is not um disregard, is not um uh having consumers avoid going to the stores.

Wrap Up And Where To Go

Megan Horneman 3:16

That's all we have today. If you want a history of our podcast, you go to marketswithmegan.fm. Thank you.