Overview
DA Davidson's weekly analysis of IRS tax refund figures indicates total refunds are up 12.0% through the first six weeks of the refund season compared with the same span a year earlier. That cumulative growth rate remained essentially steady from last week's reported 10.9% cumulative increase, leaving the current season on pace to be the largest since at least 2013.
Recent weekly dynamics
Looking at the most recent week, the firm reports the total number of refunds delivered rose 7.4% relative to the comparable week last year. Meanwhile, the average refund amount increased 13.0% to $3,277 versus the year-ago period. On a dollars basis, total refund dollars for the week climbed 21.4% year over year, an acceleration from the 8.6% increase recorded the prior week.
Why this matters
DA Davidson monitors IRS refund activity weekly as a near-term indicator of spending for lower income households, a cohort that typically spends refunds quickly. The firm notes that these flows are particularly relevant for retailers and sectors that serve this demographic, explicitly mentioning big-box and discount grocers, value apparel chains, auto parts sellers, used-vehicle dealers, and power sports outlets.
Sectors potentially affected
- Mass merchandisers and discount grocers, including Walmart (NYSE:WMT) and Grocery Outlet (NASDAQ:GO)
- Value apparel retailers such as Citi Trends (NASDAQ:CTRN)
- Automotive-related sellers including auto parts retailers and used vehicle dealers like Carvana (NYSE:CVNA)
- Recreational vehicles and power sports retailers, exemplified by chains such as RideNow
Caveat
DA Davidson cautions that it is still early in the refund season to draw definitive conclusions about how this year's overall refund growth will compare with prior years. The firm presents the weekly and cumulative figures as indicators rather than conclusive evidence of sustained consumer spending trends.
Key points
- Total refunds are up 12.0% through six weeks versus last year, with the cumulative growth rate close to last week's 10.9% figure.
- The most recent week saw a 7.4% increase in refunds delivered, a 13.0% rise in average refund size to $3,277, and a 21.4% gain in total refund dollars year over year.
- These patterns are most relevant to retailers and services serving lower income households, including big-box, discount grocery, value apparel, auto parts, used-vehicle, and power sports retailers.
Risks and uncertainties
- Timing and early-season data - DA Davidson explicitly notes it is early in the refund season, meaning current trends may not persist across the full season.
- Interpretation limits - Weekly and cumulative refund statistics indicate short-term spending propensity for lower income customers but are not definitive predictors of long-term consumer behavior.
- Sector exposure - Retail and automotive-related businesses that rely on quick-spending refund recipients could see variable impacts if refund patterns shift later in the season.