U.S. Chamber of Commerce
In 2022 consumer spending had been outpacing high inflation, but in May retail sales (purchases of goods at retail stores, including online, and at bars and restaurants) fell 0.3% before adjusting for inflation. When adjusting for the 1% increase in prices, they fell by 1.3%.
Why it matters: Retail sales grew strongly each month this year: 2.7% in January; 1.7% in February; 1.2% in March; and 0.7% in April.
Details:
Auto sales were the biggest driver of the decline, falling 3.5%, largely because of constrained supply. On the flip side, consumers increased spending on gas a whopping 4% because of higher prices.
Sales were up at building material and garden supply stores (0.2%), food and beverage stores (1.2%), gas stations (4%), clothing and accessory stores (0.1%), sporting goods and hobby stores (0.4%), general merchandise stores (0.1%), and food and drinking places (0.7%).
They were down at motor vehicles and parts dealers (-3.5%), furniture stores (-0.09%), electronics and appliance stores (-1.3%), health and personal care stores (-0.2%), miscellaneous stores (-1.1%), and non-store retailers (-1%).
Be smart: If it weren’t for the drop in car sales, retail sales would have risen 0.5%, although this still would’ve been a decline when adjusting for inflation.
Bottom line: Consumers’ ability to spend in the face of high inflation is a key factor determining whether the economy can stay out of recession, which is why we’ll be watching spending data closely.
