Consumer Spending Rises in March, Added Money Going Toward Gas

WASHINGTON -- Consumers spent more in March, but most of the added money went toward higher gas prices.

Retail sales increased 0.4 percent last month, the ninth consecutive gain, the Commerce Department reported Wednesday. The increase shrank to a slight 0.1 percent when sales at gasoline stations were excluded.

The biggest decline in auto sales in more than a year also pulled down overall sales. When taking out sales at gas station and of autos, retail sales rose 0.6 percent.

Economists are hoping that a payroll tax cut and brighter outlook for job growth will keep consumers shopping this year. Consumer spending accounts for 70 percent of economic activity.

But analysts worry that the recent spike in energy prices will not leave shoppers with much left over to spend on other goods and services. The nationwide average for regular gasoline is now $3.80 a gallon, up from $3.56 a month ago, according to the motor club AAA.

For March, sales of autos dropped a sharp 1.7 percent, the biggest decline since February 2010.

However, some of the weakness was because General Motors scaled back incentive offers.

Economists believe the outlook for auto sales for the rest of this year remains bright, given improving job prospects.

Shoppers did spend 3.6 percent more at furniture stores. Sales were also rose at appliance stores and specialty clothing stores. Sales at general merchandise stores, the category that includes big retailers such as Wal-Mart, rose 0.4 percent.

However, sales at just department stores such as Macy's saw a 0.2 percent drop in March. A survey of major retailers from Costco to Victoria's Secret had reported surprisingly good sales for March. Analysts said the gains would have been better but for the fact that Easter does not come until late April this year.