A shopper holds a Banana Republic bag in San Francisco, Calif.
Photograph by Justin Sullivan — Getty Images
By Chris Matthews
March 12, 2015

What’s going on with the American consumer?

While gas prices rose in 2015, they’re still more than $1 cheaper per gallon, on average, than this time last year. That’s supposed to be a huge boon for consumers. In fact, analysts at Goldman Sachs say the decline should have the same effect on American consumers as a more than $100 billion tax cut.

But this supposed boon just isn’t showing up in a lot of the macroeconomic data.

Sure, employment gains remain strong (Thursday’s estimate of new unemployment claims was a surprisingly low at 289,000), but other data look less than robust. Take, for instance, the Atlanta Fed’s GDP Now indicator, which uses real-time data to estimate what the pace in real GDP growth is in real time. The indicator places growth in the first quarter at 0.6%, far below the consensus predictions:

If this prediction turns out to be correct, it puts the U.S. economy on path to have its worse quarter of growth in a year. And on Thursday, the Census Bureau announced that retail sales shrank in February, the third straight month that total sales decreased. For now, analysts are blaming the trend on weather. As Chris Christopher of IHS Global Insights wrote in an analyst note:

In February, retail sales went into negative territory due to winter weather that blasted large parts of the country. Many Americans were dealing with excessive snowfall and were not in the mood to head out to the mall, auto dealerships, or restaurants. However, grocery stores and non-store (online) retailers weathered the storm rather nicely … We expect consumers to come out swinging in March.

Neil Dutta, Head of Economics with Renaissance Macro Research points out that Thursday’s report “widens the gap” between the hiring retailers are doing and the amount of money consumers are actually spending. Here’s a chart from Dutta laying out the divergence between the total number of hours worked by retail employees and the change in retail sales. Normally, these two measures tack closely with one another, but, as you can see, they’re beginning to drift apart:

“Something’s gotta give,” wrote Dutta. He also thinks we’ll see sales catch up with hours, rather than the other way around.

Today’s retail report may just be the product of weather, but three-straight months of declining sales isn’t good news, no matter what season it is. Another month like this, and macro economists may have to start rethinking whether U.S. employers can keep up the sort of hiring they’ve done of late.

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