US retail sales rose substantially in March on a jump in car purchases and other goods such as electronics, suggesting consumers were scrambling to get ahead of tariffs.
The value of retail purchases, not adjusted for inflation, increased 1.4%, the most in over two years, Commerce Department data showed Wednesday. Excluding autos, sales climbed 0.5%.
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The advance suggests consumers were rushing to buy cars before President Donald Trump's 25% tariffs on finished vehicles, with duties on parts set to take effect no later than May 3. That's expected to drive up prices by thousands of dollars, though Trump is exploring possible temporary exemptions.
While autos saw the biggest advance in two years, the overall gain was broad, with 11 of the report's 13 categories posting increases. Sales of building materials, sporting goods and electronics climbed as well, which could also indicate consumers were trying to beat tariffs on such goods. Many of those products are made in China and are now facing 145% levies.
Several surveys of consumer attitudes have plunged as Trump presses forward with tariffs, which are also causing some measures of inflation expectations to soar and tanking Americans' perception of their financial situations. With low-income consumers already facing hardships and wealthier ones being hit by a recent stock-market selloff, that's clouding the outlook for spending and adding to recessions fears.
The data showed so-called control-group sales — which feed into the government's calculation of goods spending for gross domestic product — climbed 0.4% in March, suggesting momentum at the end of the first quarter. The measure excludes food services, auto dealers, building materials stores and gasoline stations.
While importers are the ones who pay for tariffs, they ultimately pass at least some of those costs on to consumers — even if the pass-through can take a few months. Since retail sales figures aren't adjusted for inflation, tariffs may distort the numbers going forward, as an advance could merely reflect higher prices rather than greater sales activity.
Companies like Ford Motor Co. and Walmart Inc. are trying to help consumers by attempting to offset some of the additional costs, which will eat into margins. Still, executives from luxury group LVMH to brewer Constellation Brands Inc. have generally been downbeat on the outlook and are wary as to how consumers will respond.
Federal Reserve officials are now in wait-and-see mode until they get further clarity on how tariffs impact prices — and the economy as a whole. Some policymakers have argued that the levies would result in a one-time price shock, while others warn the impact could be broader.
Spending at restaurants and bars, the only service-sector category in the report, increased 1.8%, also the most since January 2023.
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