Consumer spending up in April: CNBC/NRF Retail Monitor

Key Concepts:

• CNBC/NRF Retail Monitor: A measure of retail sales, excluding autos and gas, powered by real credit card spending data from Affinity Solutions.
• Headline vs. Core Numbers: Headline figures include all retail sales (ex autos and gas), while core figures further exclude restaurants.
• Tariff Front-Running: Consumers and businesses purchasing goods in advance of anticipated tariff increases.
• Consumer Sentiment: Overall consumer confidence and outlook on the economy.
• High-Frequency Credit Card Data: Real-time or near real-time data on consumer spending habits obtained from credit card transactions.

I. Overview of CNBC/NRF Retail Monitor Results

• The CNBC/NRF Retail Monitor indicates strong retail sales for the second consecutive month.
• This positive data contrasts with separate data showing "extremely downbeat views on the economy."
• Potential factors contributing to the strong sales include tariff front-running and a calendar shift of Easter into April.
• The monitor is "powered by real credit card spending data" obtained from Affinity Solutions.

II. Specific Data Points and Sector Performance

• Headline number (ex autos and gas) is up 0.7% month-on-month.
• Core number (ex autos, gas, and restaurants) is up 0.9% month-on-month.
• Year-over-year, the headline number is up a "robust" 6.8%, and the core is up 7.1%.
• The report follows two negative months at the start of the year.
• Sectors showing growth:
  • Electronics and appliances: Up 2.8%
  • Building and garden supplies: Up 2.8%
  • Health and personal care: Up 1.4%
  • Clothing: Up 1.1%
  • Furniture and home furnishings: Up 0.9%
• Restaurants and bars were "one of only two numbers that were just barely negative."

III. Analysis and Interpretation

• The NRF commentary states that "consumers maintain their ability to spend."
• Consumers may be spending "as they get ahead of price increases [due to] supply chain dislocations" and tariff uncertainty.
• The report suggests that front-running may be evident in sectors like electronics and appliances.
• Fed Chair Powell mentioned seeing strong consumer spending in credit card data.
• The Fed "routinely looks at high frequency credit card data, just like we're showing to you in the CNBC, NRF retail Monitor."

IV. Projections and Considerations

• It is difficult to project future trends based solely on these numbers.
• The current backdrop includes low unemployment and rising incomes (above the inflation rate), but consumer sentiment is down.
• The report anticipates a potential "give back from the front running" in imports, which could benefit the second quarter.
• There may be a "retraction in some consumer spending" if spending was primarily driven by front-running.
• The report emphasizes the need to determine how much spending is due to front-running versus genuine consumer demand.

V. Conclusion

The CNBC/NRF Retail Monitor indicates strong consumer spending, but the underlying reasons are complex. While factors like low unemployment and rising incomes support spending, tariff front-running may also be playing a role. Future trends will depend on the extent to which spending was driven by front-running versus genuine consumer demand. The report highlights the importance of monitoring high-frequency credit card data to understand consumer behavior.