Retail sales numbers for March had been down compared with last year, in part because of a rise in Social Security payroll taxes. But April's numbers rebounded unexpectedly.
US retailers posted an unexpected rise in sales for the month of April, an encouraging signal of consumer resilience in the face of tax hikes that went into effect at the start of the year.
Overall, retail sales rose 0.1 percent in the month, slower than usual but good news compared with 0.5 percent decline registered in March and the similar decline that forecasters had expected for April.
The recent weakness among consumers has stemmed from a combination of weak wage growth and tax hikes. In January, taxes went up on all workers, with the expiration of a temporary payroll tax cut equal to 2 percent of wages. Ordinary income taxes also rose for high-income earners.
“April’s retail sales data provided the strongest sign yet that households have largely shrugged off January’s tax hikes,” Paul Dales of Capital Economics said Monday in a report analyzing the new numbers. “This is perhaps partly due to the recent plunge in gasoline prices, which has left them with more cash to spend on other items.”
Gas pump prices have fallen about 2 percent since February, according to the latest figures from AAA’s Daily Fuel Gauge Report.
All this confirms a picture of an economy that’s growing modestly rather than faltering under the strain of tax hikes and tighter government spending.