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Strong March retail data, bolstered by low unemployment and tax refunds, suggests US consumers are absorbing the energy price shock from the Iran war without significantly pulling back on broader spending.

What caught our eyes this week

Resilient retail sales

As the war in Iran enters its eighth week, all eyes are on the consumer as we look for hints to how they are responding to spiking prices at the pump. We got some good news on that front from March’s retail sales report. Even after spending $8 billion more in gas during the month, spending elsewhere held up well, with the control group (which excludes gas stations) up 0.7% from February. Spending was solid across multiple categories, including autos, furniture, food, general merchandise, and e-commerce, a welcome sign that consumers took the initial punch from energy prices in stride. Looking ahead, tax refunds should provide more cushion, with the average refund up roughly $250 over last year—a bit below estimates, but a welcome bump nonetheless. Even as the war drags on, our view is still that the US consumer can survive a world with $4-per-gallon gas (though not equally so), thanks to a low unemployment rate and the residual effects of fiscal stimulus.

Graph showing the Retail Sales Control Group month-over-month percentage changes from April 2025 through March 2026

CHART OF THE WEEK: Cerity Partners, FactSet, through March 2026.

Past performance does not guarantee future results.

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