United States retail sales declined in April and May, pulled down by a sharp drop in gas prices. However, even after including fickle gas sales, it appears as though consumers have increased their spending only modestly.
In May, retail sales plummeted 0.2%, which was the second straight monthly decline, as reported by the Census Bureau. Wholesale prices fell by the highest amount in nearly three years. Also, the producer price index fell 1% in May, which was slightly more than expected, and critical prices rose 0.2%, matching estimates.
"The continued fall in gasoline prices should support consumption by freeing up cash to be spent on other items," said Paul Dales in an article by the Washinton Post, senior U.S. economist at Capital Economics. "So although real consumption growth looks set to slow in (the second quarter), we doubt it will grind to a complete halt."
Motor vehicle sales appear to be among the only bright spots on the retail landscape. The sales of cars and parts were up 0.8% in May. Excluding those transactions, all other retail sales were down 0.4%, according to the Census Bureau.
There is question of the strength of the economy and if it will weaken, if hiring and pay doesn't pick up.
According to the Washington Post, job growth has slowed since the start of the year. Employers added 226,000 jobs on average during the first three months of the year; they have added an average of 73,000 jobs a month since April.
The strength in the first three months of this year was led by the fastest growth in consumer spending in more than a year.
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