March 2023 retail sales were somewhat disappointing, dropping month-to-month for the 4th time in the last five months, and may point to coming challenges in many retail segments. The 30-year Fixed-rate mortgages (FRM) rate dropped slightly to 6.27%, compared to 5.0% in 2022 but housing markets and the retail and consumer sectors associated with them continue to feel the impact of elevated rates. Consumers remained concerned - the Consumer Sentiment Index dropped 7.5% MTM, and while troubles in the banking sector had little impact, consumers are concerned about a potential recession.
Personal disposable income rose 8.4% in February, exceeding the Core Consumer Price Index (CPI) of 5.6%; personal consumption expenditures increased 7.6% but consumers are taking on more debt as revolving credit debt continues to climb, increasing 15.2%.
The pace of inflation did slow slightly, with the CPI up 5.0% year-over-year. The index for shelter was again a large contributor to the monthly all items increase, as was price inflation for food at and away from home. Retail gas prices declined 12% year-over-year to $3.70 / gallon nationally through mid-April vs. $4.20 last year.
Retailers in most segments are fighting for a share of an ever-tightening consumer wallet and must find more effective ways to engage and convert consumers on a personal level across all channels. Companies are reexamining the 2nd half of the year receipt and sales plans to ensure they align with recent sales shifts and account for an elevated risk of recession.
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