Retail sales show consumers stand firm in face of inflation
U.S. retail sales grew at a solid pace in April, reflecting broadbased gains and suggesting demand for merchandise remains resilient despite rampant inflation.
The value of overall retail purchases increased 0.9%, after an upwardly revised 1.4% gain in March, Commerce Department figures showed Tuesday. Excluding vehicles and gas stations, sales rose 1% last month. The figures aren’t adjusted for inflation.
The median estimate in a Bloomberg survey of economists had called for an 1% increase in overall retail sales from March and a 0.7% jump in the figure excluding autos and gas stations.
“While the increase will look less impressive after taking price movements into account, today’s data still suggests that the squeeze on household incomes from inflationary pressures isn’t yet having a material impact on discretionary spending,” said Andrew
Grantham, an economist at Canadian Imperial Bank of Commerce.
The data suggest that Americans are still spending on merchandise at a rapid clip — fueled by credit-card borrowing — even as prices rise at the fastest pace in decades. That said, economists expect consumer spending to shift away from goods and toward services like travel and entertainment as pandemic-related concerns wane and demand for summer activities picks up.
The figures add to signs of overheated demand that’s likely to keep the Federal Reserve on track to raise interest rates by a half percentage point at each of its next two meetings, following a similar increase earlier this month. Some economists fear the Fed will crush demand while trying to tame inflation, which could tip the U.S. into a recession.
Consumer spending is by far the biggest contributor to the economy, and it may fall this year due to the end of federal stimulus, rising interest rates and declining savings.