Retail sales jump to a 3-year high due to surging gas prices, but consumers also aren't showing any quit

By Jeffry Bartash

First-quarter GDP could get boost from household spending

Sales at retail stores improved in March

Sales at retailers posted the biggest gain in March in three years - a sign of good health for the U.S. economy, but the increase was exaggerated by higher gasoline prices and rising inflation.

Retail receipts jumped 1.7% last month, the government said Tuesday, after factoring in seasonal patterns in sales. That's the largest increase since the beginning of 2023.

Gas stations saw a 15.5% surge in sales after the Iran war fueled a big increase in prices at the pump.

If gas stations are omitted, retail sales rose a more modest but still healthy 0.6%. What's more, sales in February and January were revised higher, a sign the economy was stronger than previously believed.

Still, the inflated cost of goods early this year also means Americans are paying more for consumer electronics, clothes and recreational items, among other things.

If high gas prices and stubborn inflation persist, retail sales could take a turn for the worse heading into the summer. Retail sales represent a large slice of consumer spending - the main pillar of growth for the U.S. economy.

Key details: The increase in retail spending in March wasn't entirely due to higher gas prices or inflation. Virtually every retailer reported higher sales for the second month in a row.

Retailers other than gas stations got a boost in March from a trio of factors: An early Easter, bigger tax refunds and warmer weather after a harsh winter.

Sales rose 4.2% at department stores, 2.2% at furniture stores, 1% at internet retailers and 0.9% at big-box electronics stores. Car dealers also reported higher receipts.

Higher gas prices could siphon money away from other retailers in the next few months if they persist, however.

Big picture: Robust retail sales in the first three months of the year could pave the way for a rebound in gross domestic product in the first quarter. GDP is the official scorecard of the economy.

The future looks less certain. The boost to the economy from larger tax refunds will fade soon, removing a cushion Americans had against high gas prices.

A big rebound in the stock market, however, could limit the damage by reassuring wealthier Americans. They account for a large share of the consumer spending that directs the economy.

Whatever the case, the economy is unlikely to speed up until the Iran conflict is resolved, inflation levels off and companies adapt to the latest round of Trump administration tariffs.

Looking ahead: "Americans might be unhappy about the economy and inflation, but they are still spending," said David Russell, global head of market strategy at TradeStation. Higher gas prices are taking a bite, but the damage is limited."

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to rise in Tuesday trading.

-Jeffry Bartash

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04-21-26 0921ET