Retail sales increased at a slower than expected pace in May as high interest rates and inflation continued to weigh on consumers.
Retail sales increased 0.1%, less than the 0.3% economists had expected. In April, retail sales ticked down 0.2%, according to revised data from the Commerce Department.
Excluding autos and gas, retail sales increased 0.1%, below estimates for a 0.4% increase but above the 0.3% decline in April.
Capital Economics chief North America economist Paul Ashworth noted Tuesday’s retail sales reading adds to “signs that consumers are struggling a little.”
“The soft May retail sales data support our view that, after a disappointing first quarter, GDP growth remains a little lackluster in the second quarter too,” Ashworth said.
Within the report, gasoline stations led the declines, falling 2.2% from the month prior. Sales at furniture and home stores were also a laggard with sales falling 1.1%. Meanwhile, sporting goods and hobby stores were the biggest gainers, with sales rising 2.8% from the month prior.
The report comes less than a week after the Federal Reserve’s revised Summary of Economic Projections (SEP) showed the central bank estimating one interest rate cut this year. The commitment to high interest rates for longer than many had hoped has economists increasingly concerned that the restrictive policy could prompt a meaningful slowdown in the US economy.
Allianz chief economic adviser Mohamed El-Erian told Yahoo Finance on June 13 the balance of risks for the Fed if it waits to cut in December “is in favor of them being too late and the economy slowing more than it should.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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