Retail

Retail Sales Shot Up In May

Hitting Reset On Real World Retail Design

Consumer confidence seems to have returned in a big way in May as retail sales soared to their highest level since November 2017, according to news from The Wall Street Journal. All in, sales were up .8 percent from a month earlier to $502 billion, per Department of Commerce figures.

Areas that was marked as increases included car sales, building supplies, sporting goods, healthcare and clothing. Excluding auto sales, which have a tendency to bounce up and down frequently month to month, retail spending was up .9 percent. That is better news than economists were expecting for May — a .4 percent increase in overall sales and a .5 percent increase in retail sales, excluding auto, had been the prediction.

Encouraging Americans’ enthusiasm to spend, according to the new report, is low unemployment, rising wages and additional liquid capital due to the tax cuts of late 2017. The positive cycle is pulling along merchant sales and stronger economic growth. Economists are predicting Q2 will show 4 percent growth in U.S. economic output — the strongest growth period is several years, if it proves out. Output was up 2.2 percent in Q1, in line with averages since 2009.

There has not been adjustment for inflation in retail sales, and at least one factor in the recent increase in spending is that certain goods are getting more expensive. Gasoline is up — tied to increasing oil prices — which means gas stations alone saw sales up 2 percent.

But even accounting for inflation, Americans are also buying more. Retail sales are up 5.9 percent year over year through May, which roughly doubles the rate of inflation as calculated by the Department of Labor.

Worth watching, of course, is Americans’ rapidly increasing household debt level — Moody’s is forecasting U.S. household debt could hit $4 trillion primarily in the form of credit cards and auto loans, which have been steadily climbing. By itself that is not terrible news — as long as consumers are managing all that debt well. But default levels have also been climbing, and some experts are starting to get concerned about what comes next.

“Although consumers’ financial health is generally strong, there is a risk that they will take on too much credit in the present accommodative environment,” Moody’s wrote in a recent report on U.S. indebtedness in 2018.

—————————

You Might Also Like:

TRENDING RIGHT NOW

To Top