The government report on retail sales for May is out, and sales dropped 1.3 percent, following two months of gains. The monthly report came out from the Census Bureau, which placed total retail sales at $620.2 billion. The report also revised the April number upward to $628.7 billion.
“Advance estimates of U.S. retail and food services sales for May 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $620.2 billion, a decrease of 1.3% (±0.5 percent) from the previous month, but 28.1 percent (±0.7 percent) above May 2020,” the report said.
“Total sales for March 2021 through May 2021 were up 36.2 percent (±0.5 percent) from the same period a year ago. The March 2021 to April 2021 percent change was revised from virtually unchanged (±0.5 percent)* to up 0.9 percent (±0.2 percent).”
Per CNN, the report indicates that the “sugar rush” of stimulus checks has begun to wear off, as most of those checks were sent out in March and April. CNBC had estimated that retail sales would rise by 0.5 percent.
Car sales, in particular, dropped 3.7 percent in May, following a 16-year high in April.
Some analysts saw the numbers as part of a shift in spending from goods towards services.
Marketwatch reported that the economy is “still primed for fast growth.”
“Don’t read too much into the larger than expected drop in U.S. retail sales in May, as it comes on the heels of an upward revision to April and a dramatic fiscal stimulus-fueled spike in March,” economist Katherine Judge of CIBC World Markets told Marketwatch.
“For the last year, demand for goods has been propped up by elevated savings supported by fiscal stimulus, bringing total retail sales well above pre-pandemic levels,” Bloomberg News said of the report. “The May decline in retail sales suggests that as travel picks up and entertainment venues reopen, spending on goods is starting to moderate.”
“While consumer spending is expected to continue strengthening, the pace will probably moderate as enhanced unemployment benefits expire and stimulus checks are spent,” Bloomberg continued. "A sustained pickup in inflation may also cause consumers to limit discretionary expenditures.”
However, the retail industry still sees a strong year ahead.
“The economy and consumer spending have proven to be much more resilient than initially forecasted," National Retail Federation CEO Matthew Shay told CNN last week.
Meanwhile, per CNBC, producer prices in May rose 6.6 percent, the fastest increase in history, the Bureau of Labor Statistics said.
The Federal Reserve is set to meet this week, and will likely consider what to do about what looks like rising inflation in the economy.
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.