U.S. retail sales rose 0.9% in May, beating the 0.5% gain economists expected. This marks the fourth straight month of strong retail sales.
These robust retail sales highlight economic resilience despite the recent U.S.-led war with Iran.
Fuel Prices Drive Retail Sales Higher
Higher gasoline prices significantly boosted retail sales last month. Receipts at service stations jumped 3.4% in May.
Gasoline prices hit four-year highs due to the Middle East conflict. However, the national average slipped below $4 a gallon recently. The U.S. and Iran have now agreed to end the war.
Consumer Habits and Core Retail Sales
Households boosted their purchases of motor vehicles. Sales at auto dealerships rebounded by 1.2%. Non-store and online retail sales also jumped 1.5%. Core retail sales increased 0.7% in May.
This core metric excludes autos, gasoline, building materials, and food services. However, spending at restaurants and bars dipped 0.1%. Consumers are making more store trips to hunt for bargains.
Conclusion: Future Retail Sales Outlook
The current momentum in retail sales is likely unsustainable. The boost from larger tax refunds will soon diminish. Inflation has outpaced wage growth for two months.
Additionally, the savings rate dropped to a four-year low. Still, consumer spending continues to drive economic growth for now.
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