Consumer Spending Takes a Hit as Retail Sales Drop in March

Retail sales in the US fell by 1% in March, below the 0.4% decline projected by Refinitiv economists, as consumers pulled back on spending due to banking turmoil, persistent inflation, and high interest rates. Excluding gasoline and autos, sales fell 0.3% last month. The slump in retail sales is mostly attributed to nearly two years of high inflation that has eroded Americans' savings, as well as the Federal Reserve's campaign to crush price pressures with a rapid series of interest-rate hikes. Staff at the Fed anticipate that higher interest rates, coupled with recent upheaval in the banking system, will tip the economy into a "mild" recession that takes about two years for recovery.