The first bit of hard tariff data just arrived, but not in the way you may have expected.
Retail sales rose 1.4% in March , according to new Census Bureau data out Wednesday, posting the best reading in over two years.
At first glance, the numbers reinforce the concept of the resilient American consumer, shelling out and swiping through concerns mounting over heightened tariff costs and a slowing economy. Taken this way, the data appears to rebut or at least complicate the growing pessimism captured in surveys of what’s in store for the American economy.
As Mohamed El-Erian, president of Queens' College, Cambridge, observed on Wednesday , “the stark contrast between US ‘soft’ and ‘hard’ data continues.” He added, “While the survey numbers continue to flash a loud yellow, activity data continues to flash green.”
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That may be true, but there's a compelling argument for viewing it in a different way.
Rather than conflicting with the seemingly negative economic vibes, what if a surge in spending actually confirms them? If consumers, as the flood of pessimistic survey data suggests, are worried about a more expensive, less fruitful future, wouldn’t we expect that they attempt to get ahead of the tariffs, placing big ticket purchases while they shop in a figurative “sale” period before the true cost of the levies kick in?
This was generally the mainstream reading on Wednesday, which jibed with a big boom in Chinese exports in March .
"The strong rebound in retail sales in March was boosted by a surge in auto sales and a more general front-loading of consumer spending ahead of tariffs," Oxford Economics deputy chief US economist Michael Pearce wrote in a note on Wednesday.
In this view, the resilient consumer isn’t bucking the collective mood but reacting to it. A glass-half-full reading is that this is the last hurrah before the big storm rolls in.
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Last week’s consumer sentiment data fell further, showing attitudes hitting their lowest level since June 2022. People reported souring expectations for business conditions, personal finances, inflation, and the labor market.
But if we were to put that all aside as a kind of tariff-inspired panic, or at least withhold judgment, what are the data points to watch going forward?
Top of mind for investors will be the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, which is scheduled for release on April 30. That same day will bring an advance estimate of the nation’s Q1 GDP. Concern over the growth impacts tariffs may have on GDP sparked headlines last month, as unofficial forecast models began charting significant negative growth .
In May, investors will receive another set of inflation data in the form of the prior month’s Consumer Price Index (CPI), as well as April’s jobs report, scheduled for May 2. By then, the market will get at least a slightly fuller picture of where things stand. And on May 15, the next retail sales data will drop, bookending this batch of hard data.
Alongside the coming metrics is the Fed’s next policy meeting , in about three weeks' time. On Wednesday, during a Chicago speech, Fed Chair Jerome Powell said the central bank will "wait for greater clarity" before considering any interest rate changes, as he expects the tariffs to generate "higher inflation and slower growth."
For now, investors are left to wrestle with backward looking figures that haven't captured the present and unpleasant surveys that anticipate a dismal future. It's possible the retail numbers are the last good data we'll see for a while.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban .
