Americans are still opening their wallets, despite rising inflation and low consumer sentiment, in a positive sign for the economy.
Retail sales rose 0.9% in May from the prior month, the Commerce Department said Wednesday, the fourth consecutive monthly increase and well above the 0.5% gain economists predicted in a poll by data firm FactSet. The figures are adjusted for seasonal swings but not inflation.
Retail spending was up across nearly every category last month, rising the most at gasoline stations by 3.4%, mostly reflecting the higher gas prices of last month. But sales were still up a solid 0.7% in May when excluding those purchases. Online sales rose 1.5% last month, while sales were down 0.5% at electronics retailers and declined 0.3% at department stores.
Wednesday’s report bodes well for economic growth in the current quarter that stretches from April through June. Consumer spending accounts for about two-thirds of the US economy, and there haven’t been any signs of consumers cutting back. That’s despite higher inflation taking a bite out of people’s paychecks, resulting in declining wages when adjusting for price increases. Consumer sentiment has also at historic lows due to higher gas prices, though sentiment hasn’t been a good predictor of future spending in recent years.
