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By Scott McIntyre, CFA
Co-Head of Investment Management
HilltopSecurities Asset Management
U.S. consumers curtailed their spending last month, although the overall pace was still historically solid and a bit better than expected. Advance retail sales rose +0.5% in April following a revised +1.6% March increase. A +2.8% rise in gasoline station receipts (due entirely to higher gas prices) accounted for over 40% of the headline increase. When this inflation-tinted category is excluded, sales were up just +0.3%. Other sales categories contributing to the April gain included grocery stores (+0.7%) and eating and drinking establishments (+0.6%), both reflecting higher prices rather than increased volume. Calculations by the Federal Reserve Bank of Chicago show inflation-adjusted sales growth unchanged in April after a -0.1% adjusted decline in March.
The so-called retail sales control group, which excludes sales at auto dealerships, gas stations, building materials stores and food service establishments, rose +0.5% last month, slightly above the +0.3% median forecast. Since control group sales feed into the GDP calculation, it appears the second quarter has begun on a sluggish note.
There were several unusual factors influencing data during the past two months. The early Easter holiday pulled sales forward in March at the expense of April, while larger than normal tax refunds contributed additional spending capacity to both months.
This report, which is unlikely to have a market impact one-way-or-another, suggests that Americans may be starting to feel the pinch of higher prices. The tax refund sugar high is expected to fade in the coming months, implying reduced ability to spend as the summer approaches.
In other news this morning, U.S. import prices for April rose +1.9%, the most since 2022, continuing the recent string of hot inflation numbers. Ultimately, this price pressure will influence spending, GDP growth and Fed policy. Much of the other economic data at this point is mostly noise.
About Scott McIntyre, CFA
As HilltopSecurities Asset Management’s Co-Head of Investment Management, Scott McIntyre specializes in investment management services and is responsible for the management, oversight and trade supervision of more than $30 billion in institutional fixed income assets for HilltopSecurities’ public sector municipal clients. Scott also provides investment advice and consulting, reviews local government investment policies, formulates overall investment strategies, evaluates account performance and oversees the day-to-day operations. He is a member of the Chartered Financial Analyst (CFA) Institute and a CFA Charterholder, a two-term advisor to the GFOA Treasury and Investment Management (TIM) committee, a Registered Investment Advisor, and holds FINRA Series 7, 24, 63, and 65 licenses.
About Greg Warner, CTP
As HilltopSecurities Asset Management’s Co-Head of Investment Management, Greg Warner specializes in investment management services and is responsible for the management and oversight of more than $30 billion in institutional fixed income assets for HilltopSecurities’ public sector municipal clients. Greg coordinates all client services and portfolio management duties, including security evaluation and portfolio analysis, trading, investment reporting, board presentations, and monitoring of broker-dealer relationships. He is an advisory committee member to the Texas Association of Counties, a member of the Government Treasurers’ Organization of Texas (GTOT), a Registered Investment Advisor, a Certified Treasury Professional (CTP) and holds FINRA Series 7, 63, and 65 licenses.
About Matt Harris, CFA
As HilltopSecurities Asset Management’s Senior Portfolio Advisor, Matt Harris specializes in investment management services for public sector municipal clients. He developed his experience in the banking industry, supporting balance sheet management, interest rate risk analysis, liquidity planning, and investment strategy implementation. At HilltopSecurities, he works closely with clients to develop and implement customized investment strategies, oversees account documentation and reporting, and assists clients with the public funds depository review process, including competitive RFP evaluations. Harris is a member of the CFA Institute and a CFA Charterholder, a Registered Investment Advisor, and holds FINRA Series 7, 63, and 66 licenses.
The paper/commentary was prepared by HilltopSecurities (HTS). It is intended for informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product. Information provided in this paper was obtained from sources that are believed to be reliable; however, it is not guaranteed to be correct, complete, or current, and is not intended to imply or establish standards of care applicable to any attorney or advisor in any particular circumstances. The statements within constitute the views of HTS as of the date of the document and may differ from the views of other divisions/departments of Hilltop Securities Inc. and its affiliates. In addition, the views are subject to change without notice. This paper represents historical information only and is not an indication of future performance. This material has not been prepared in accordance with the guidelines or requirements to promote investment research, it is not a research report and is not intended as such. Sources available upon request.
Hilltop Securities Inc. is a registered broker-dealer, registered investment adviser and municipal advisor firm that does not provide tax or legal advice. HTS is a wholly owned subsidiary of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, Texas 75201, (214) 859-1800, 833-4HILLTOP.