Today we present the latest on consumer spending and the housing market, so get ready for another good news bad news edition of The Line. First, the good news.

Retail Sales Surge 0.7% in March

Consumers continue to show that can keep defying the odds and keep spending, as proven in the better-than-expected March retail sales report. Economists were looking for just a 0.3% gain, so this is a very strong report. February’s increase was revised up to 0.9%, also good news.

Here are some other highlights:

• Retail sales are up 4% over the past year. This data is not adjusted for inflation—which rose 3.5% during that time—so the gain is more like 0.5%.

• Total sales came in at a seasonally adjusted $709 billion. Nothing else to say about that, just thought you might be wondering how much stuff we buy each month.

• The biggest increases in sales were posted by nonstore retailers—aka internet sales—up 2.7%, and gasoline stations (+2.1%). Gas stations were helped by the sharp rise in gas prices in the past two months.

It’s great news that consumers keep spending, as they account for 70% of GDP. We’ll get the 1Q24 GDP report next week, which should be very strong with the recent surge in hiring and spending. Right now, the Atlanta Fed’s GDPNow forecast is looking for a 2.9% rate of growth.

But there is a bad side to this, and that’s the struggle with inflation. The Fed is already having a hard time getting inflation down to their 2% target, and recent economic data show it’s only going to get harder. At this point, I don’t expect any rate cuts this year, and while it may not happen, expect to hear more about a potential rate hike.

Now for some not-so-good news.

Exisiting Sales Down 4.3% in March

As you can see, rates have moved a lot since July even though the Fed hasn’t touched rates.

We should also remember to be grateful the economy is doing so well. Many economists—me included—thought we’d be in recession right now. Instead, we have a booming economy with almost 9 million available jobs out there. One final thing to keep in mind is that while borrowing rates have gone up, so have savings rates. When mortgages were sitting at 3%, most of us were getting about 0.25% interest on our savings accounts. Today, you can find money market rates over 5%.

Hopefully I haven’t given you too much to think about, and you can go out and enjoy your weekend.