Retail Sales Stall
The value of U.S. retail purchases, unadjusted for inflation, was little changed from a month earlier, and gains in prior months were lower than previously thought.
U.S. retail sales stagnated in April after downwardly revised gains in the prior two months, indicating that high borrowing costs and mounting debt are encouraging greater prudence among shoppers.
The value of retail purchases, unadjusted for inflation, was little changed from a month earlier after a revised 0.6 percent March increase, Commerce Department data showed Wednesday. Much of the spending during the month was on necessities, such as food and gasoline.
The median forecast in a Bloomberg survey of economists called for a 0.4 percent rise. Excluding cars and gasoline, sales dropped 0.1 percent.
Seven out of 13 categories posted sales decreases, led by a pullback at non-store retailers and sporting goods and hobby merchants. Receipts at gas stations rose 3.1 percent as prices advanced, while auto sales declined.
The sales figures indicate a softening in the otherwise resilient consumer demand that has been bolstering the economy. While a still-healthy labor market is providing the wherewithal to spend, elevated prices and interest rates risk further squeezing household finances and limiting discretionary purchases.
Household debt reached a record high in the first quarter, and the proportion of consumers struggling to repay debts rose, the Federal Reserve Bank of New York reported Tuesday. With budgets becoming tighter, Americans are growing less upbeat.
| Metric | Actual | Estimate |
|---|---|---|
| Retail sales (month-over-month) | 0.0% | +0.4% |
| Sales excluding autos, gas (month-over-month) | -0.1% | +0.2% |
| ‘Control group’ sales (month-over-month) | -0.3% | +0.1% |
Separate figures Wednesday showed a measure of underlying inflation cooled in April for the first time in six months, indicating that price pressures are abating gradually and supporting the Fed’s intent to keep interest rates higher for longer.
A closely-watched gauge of consumer sentiment slid to a six-month low in early May amid worsening expectations for inflation and the jobs market.
The retail report showed so-called control-group sales—which are used to calculate gross domestic product (GDP)—dropped 0.3 percent in April. The measure excludes food services, auto dealers, building materials stores, and gas stations.
Retail figures largely reflect purchases on goods, which comprise a relatively narrow share of overall consumer outlays. Data due later this month will provide more details on inflation-adjusted spending on goods and services in April.
The retail report showed spending at restaurants and bars, the only services component in the data, remained tepid. Outlays rose 0.2 percent after falling 0.1 percent in the prior month.
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