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Consumer Spending · Inflation · Retail Sales · US Economy
U.S. retail sales increased by a strong 0.9% in May, surpassing expectations and underscoring the resilience of American consumers, a robust gain attributed to warmer temperatures, cooling gasoline prices, and generous government tax refunds, as reported by the U.S. Commerce Department.
This 0.9% gain represents an acceleration from a revised 0.4% increase in April. Excluding sales at gas stations, retail sales in May rose 0.7%, and the so-called control group, a key metric for calculating economic growth, also increased by 0.7%, suggesting solid underlying spending, economists stated.
Spending was broad-based, with increases in clothing, accessory, furniture, and online sales, which rose 1.5%. However, electronics, appliance, and department stores registered slight declines, and restaurant sales declined 0.1%.
Nationwide Chief Economist Kathy Bostjancic noted that strong employment growth and tax reductions buffered the negative drag from higher gasoline prices. Despite consumer resilience, inflation remains a concern, with consumer prices rising 4.2% in May compared to last year, as U.S. data showed.
Steve Lamar, CEO of the American Apparel & Footwear Association, expressed concerns about unplanned costs squeezing profit margins due to high ocean freight, air cargo, and packaging expenses, even with a tentative deal to end the Iran war. Placer.ai's R.J. Hottovy observed consumers adapting to high gas prices by favoring big box stores for fuel discounts.
