On April 17, U.S. retail sales in March, announced last Friday, fell by 1% month-on-month, a drop that exceeded market expectations.
Canadian Imperial Bank of Commerce analysts said that as consumers became more cautious, the monthly rate of U.S. retail sales fell sharply in March, which together with other recent data released, all pointed to a cooling of U.S. economic activity.
The Fed is looking for clear signs of cooling economic activity, and this data is good evidence, but with sales in the control group still 5.8% above the pre-pandemic trend level, a 1% month-on-month decline in retail sales is not enough to stop the Fed Raise rates by 25 basis points in May.
Moreover, the data further suggested that the deterioration in U.S. economic activity may intensify in the second quarter.