WASHINGTON (AP) -- A report Monday on April sales at U.S. retail businesses could show whether consumers are growing more worried about the economy or regaining their confidence after a temporary March lull.
Economists forecast that retail sales declined 0.3 percent in April, according to a survey by FactSet. That would follow a 0.4 percent decline in March — the biggest drop in nine months.
Two straight months of declining retail sales would suggest that higher Social Security taxes are starting to make Americans more cautious about spending.
The Commerce Department will release the report at 8:30 a.m. EDT Monday.
The retail sales report is the government's first look each month at consumer spending, which drives 70 percent of economic activity.
Consumer spending on all goods and services rose from January through March at the fastest pace in two years. That helped the economy grow at a 2.5 percent annual rate, much better than the anemic 0.4 percent rate in the previous quarter.
But most of the increase came from greater spending at the start of the quarter. Consumers cut back sharply on retail spending in March.
Some of the decline reflected lower gas prices, which fell even further in April and could help boost spending later this spring. The retail sales figures are not adjusted for price changes.
Still, excluding the volatile categories of autos, gas and building materials, core retail sales fell 0.2 percent in March.
There are some signs that consumers shrugged off the tax increase and kept spending in April.
Automakers reported that their sales in April rose, although the pace slowed from the first three months of the year. And some big retail stores reported sales gains last month, even though cold weather tempered Americans' desire to buy spring fashions.
Steady job growth may have helped offset some of the pain from the tax increase. The economy added 165,000 jobs in April. And it has created an average of 208,000 jobs a month since November. That's well above the monthly average of 138,000 for the previous six months.
Cheaper gas may also give consumers more money to spend on other things. The national average price has risen slightly over the past week to $3.56 a gallon. But it is still 23 cents lower than the peak price reached on Feb. 27.
And surging stock market and increases in home prices may also make consumers feel wealthier and more inclined to spend.
The economy is benefiting from the Federal Reserve's aggressive stimulus actions, which have lowered borrowing costs for consumers and businesses and helped lift the stock market to record highs. The Fed has said it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent.
