Retail Sales Data Shows Consumers Remain Undaunted by Inflation

The latest retail sales data brings to mind that old 1960s mantra: Keep on truckin’.

U.S. individuals and households boosted their spending in May, seemingly shrugging off inflation and any concerns over carrying what amounts to $17 trillion in debt.

Per the headline numbers from the Commerce Department released Thursday (June 15), retail sales were up 0.3% month on month, representing a slight deceleration from the revised April estimate 0f 0.4% growth. The latest reading bucks the consensus that held that that spending would dip in May.

Broad-Based Spending

And, drilling into the data, spending was notably pronounced at auto vehicle and parts dealers, as sales were up 1.4% month on month and were up 4.4% from a year ago. Spending at grocery stores was up 0.2% from April and was up 3.1% from a year ago. And it seems there’s an increased willingness to go out to get a bite, as sales at food and drinking establishments surged 0.4% from April and were up an impressive 8% from last May. Non-store retailers, a category that captures a significant slice (though not all) of online sales, gathered 0.3% from April and 6.5% from 12 months ago. Sales at establishments supplying building materials and gardening items were up 2.2% from April’s levels, standing in contrast from the 0.9% decline from a year ago.

The portrait that emerges, then, is of a consumer who’s fixing up the car, maybe even taking the plunge to buy a new one. They’re getting the garden ready for spring and summer. And with the warmer weather, they are finding opportunity and interest in gathering with friends and family outside the house.

At least some of that willingness to spend, we note, might stem from the fact that sales at gas stations were down 2.6% on a monthly basis and a whopping 20.5% vs. last year. Energy prices are down markedly, of course, which give a bit more leeway in the wallet to spend on other things.

But one month of a better-than-expected retail showing does not a trend make, given the fact that the data is often lumpy.  And, connecting the dots to other economic reports signals that there may be some pressure in the wings, poised to dampen May’s enthusiasm.

Consider the fact that Initial unemployment claims unexpectedly rose to 262,000 in the week that ended on June 10 vs. 261,000 in the previous week. The consensus here had been that jobless claims had been expected to fall to 248,000.

If jobless claims remain high in the weeks or months ahead, there may be some rethinking on the part of consumers about expenses, and how freely they feel they can spend. As detailed here, PYMNTS’ own data as disclosed in the “Consumer Inflation Sentiment” show some increasing concern about the economy, overall.

From the January low of 28%, the share of consumers extremely concerned about current and near-future economic conditions has steadily increased, reaching 32% in May.