Retail sales rose more slowly than expected in May as high interest rates and inflation continued to weigh on consumers.
Retail sales rose 0.1%, less than the 0.3% economists expected. Retail sales fell 0.2% in April, according to revised Commerce Department data.
Excluding autos and gasoline, retail sales rose 0.1%, below expectations for a 0.4% increase but above April’s 0.3% decline.
Paul Ashworth, Capital Economics’ chief economist for North America, noted that Tuesday’s retail sales data added to “signs that consumers are struggling a bit.”
“The soft retail sales data in May supports our view that, after a disappointing first quarter, GDP growth will remain somewhat subdued in the second quarter,” Ashworth said.
According to the report, gas stations led the charge, down 2.2% from the previous month. Turnover at furniture and home furnishing stores also lagged behind: turnover fell by 1.1%. Meanwhile, sporting goods and hobby stores were the biggest winners, with sales up 2.8% from the previous month.
“Consumer spending is slowing as real income growth moderates and as some consumers face credit constraints amid higher interest rates and increased use of credit cards,” Michael Pearce, deputy chief economist at Oxford Economics, wrote in a note to clients.
The report comes less than a week after the Federal Reserve’s revised Summary of Economic Projections (SEP) showed the central bank expects one rate cut this year. The fact that interest rates remain high for longer than many had hoped has economists increasingly concerned that restrictive policies could lead to a meaningful slowdown in the U.S. economy.
Mohamed El-Erian, chief economic adviser at Allianz, told Yahoo Finance on June 13 that the risks for the Fed if it waits to make cuts in December “are in favor of being too late and the economy slowing more than it should.” must.”
Over the past week, markets have increasingly taken into account the likelihood of a rate cut in September. On Tuesday, markets were pricing in a 67% chance of a cut in September, compared to a 52% chance last week, according to the CME FedWatch Tool.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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