March retail sales hit a two-year high.
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00:00Well, the retail sales report that came out for March was in line with our expectations.
00:06We were expecting a strong number for March.
00:10We didn't expect to see there'd be a strong upward revision in February as well, but we
00:15attributed a lot of the weakness in January and even in February to the weather.
00:20And so we were expecting, you know, in the spring there would be growth and there was.
00:25So the consumer is still spending.
00:28Some of that strength is related to people scrambling to buy cars before the tariffs
00:34lead to higher car prices.
00:36And that may continue for another couple of months.
00:39And then the risk of things will slow down on the consumer side.
00:42I think despite the weakness in consumer sentiment, you know, when you ask consumers how they
00:47feel about things, they tell you they're pretty depressed.
00:50They're worried about the tariffs having an impact on rising prices.
00:54They're worrying that they might lose their jobs.
00:57So they've got a lot of worries.
00:58And yet, despite all that, retail sales in March was very strong.
01:04And they're spending a kind of, well, they're definitely spending on autos, trying to get
01:08ahead of price increases in autos.
01:10But they're also spending on health care.
01:13They're spending a lot on services, on health care services.
01:16They're still traveling more so overseas than domestically.
01:20They're definitely spending on health care.
01:23And that industry has continued to grow.
01:26I think that we're seeing some slowdown maybe in leisure and hospitality, hotels and motels
01:32in the United States, maybe not in foreign travel.
01:36But of course, what we want is we want consumers to spend more in the U.S.
01:41So there could be some slowdown overall in consumer spending as we get into the summer, into the
01:48fall.
01:48But again, much will depend on the course of tariff negotiations.
01:53Over the past three years, there was a lot of talk that consumers were going to retrench
01:58because the Federal Reserve was raising interest rates.
02:01And that really didn't happen.
02:03The consumers actually remained remarkably resilient.
02:06Of course, the consumers are very dependent on the job market.
02:10And the job market remained remarkably resilient.
02:13That's partly because there's actually a shortage of workers in the United States, especially
02:17skilled workers, and especially now that we've got a closed border.
02:21And as a result of that, consumers have jobs.
02:25They're not losing them at this point.
02:26And I think as long as the job market stays relatively robust, I think the consumers will
02:33spend even if they're not feeling particularly happy about things.