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By: Tadia Toussaint

U.S. retail sales are expected to bounce back in tomorrow’s March report.

Economists are expecting an increase of 0.1%. A gain in consumption for tomorrow’s report would be the first increase for the year.

February’s retail sales decreased 0.1 percent. Last month’s report also showed revisions for December’s sales which changed from the initially-reported increase of up 0.2 percent to down 0.4 percent.

The global economic slowdown and the strong U.S. dollar is hurting U.S. manufacturers emphasizing the need for consumers to propel economic recovery. Economists greeted January’s report with relief, as a sign that consumers were staying on track, last month’s report changed all of that.

The strong dollar has encouraged purchasing power overseas because of the cheaper imports. “But a lot has to happen before we see lower prices on the shelves,” says Michael Davis, PhD, who teaches business strategy and economics at the Cox School of Business at Southern Methodist University in Dallas Texas.

“People just aren’t spending the way we want them to spend,” Bernard Weinstein,  Ph.D., economist and associate director of SMU’s Maguire Energy Institute.

What are economists looking for in tomorrow’s report?

1. Headline numbers: Consumers drive 70% of the economy. Economists are looking to see how the retail sales rate is fluctuating to get an idea of whether or not people are spending. The retail sales number gives a piece of the larger picture about consumer sentiment. The stock market improved and people felt better Sales overall this year haven’t been as great as most economists would like.

“If you got a good job, you feel pretty good about the economy, If you don’t you feel like it’s awful,” said Mark Vitner Senior Economist at Wells Fargo.

Economists think Americans are have a solid foundation of which to spend money. Disposable income from the still low gas prices and the jobs report showed strong job growth should likely fuel an increase in the core numbers which exclude autos sales and gas.

“It’s tough to find a good job and that’s what’s hurting the report,” Vitner said.  Though the jobs report is showing strong job growth, “there are lots of low-paying jobs.”

“We’ll be looking to see if retail sales numbers will reinforce employment numbers,” said Davis.

2. Core Numbers:

Falling oil prices and low sales at gas stations have driven the decline of retail sales, nonetheless other sales have fell, showing that consumers aren’t spending their money.

“Because gas prices have been going down, that makes the retail sales number look less impressive than they would otherwise be,” Davis said.

3. Leading Sectors: People have money but where are they spending it?  Sectors like building materials, construction supplies and sporting good stores have been doing well in the last few months.

“It’s been a milder winter, I think construction will continue to do pretty good and vinyl is coming back, so music is thriving,” Vitner said.

4. Impacts from Early Easter

Vitner, like other economists said that he’ll have his eye on the number excluding food, autos, gasoline purchases and energy.  But he said “even that would be distorted by the unusally early Easter so it will not give us as good a read.”

“Easter came in March, you would think that it would help but it actually hurts it.  It’s adjusted for holiday sales.”