The backbone of America’s economy was just dealt a serious blow
By Elisabeth Buchwald, CNN
New York (CNN) — US consumers could be reaching their breaking point. After dealing with elevated inflation and the highest interest rates in decades, they’re starting to rein in their spending.
Last month, retail sales were unchanged from March, when spending increased by a downwardly revised 0.6%, the Commerce Department reported on Wednesday.
April spending missed the 0.4% increase that economists had projected, according to FactSet. The figures are adjusted for seasonal swings but not inflation.
By comparison, a year ago, retail sales surged by 3%.
Stripping away auto sales, April retail sales were up by 0.2% last month, matching economists’ expectations.
By sector, the biggest monthly increase in spending was at gas stations, where sales were up 3.1% in April compared to March. That’s likely a result of surging gas prices experienced in the previous two months. However, they’ve started to cool in recent weeks.
Spending was also higher at clothing and accessory stores (+1.6%), food and beverage stores (+0.8%) as well as at restaurants and bars (+0.2%).
Almost all other sectors saw monthly declines in spending. The biggest decline was online retail sales, which fell by 1.2% last month. That’s a significant development given online sales have been a bright spot in prior months.
Separately, new inflation figures released Wednesday by the Bureau of Labor Statistics showed some improvement. The nation’s annual inflation rate eased from 3.5% in March to 3.4% in April, in line with expectations. That came after March’s unexpected jump in inflation.
Both pieces of data are welcome news for Federal Reserve officials: Central bankers have been looking for signs that inflation will return back to the Fed’s 2% target.
This is a developing story and will be updated.
The-CNN-Wire
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