Retail sales rebounded, as did consumer prices, and not surprisingly consumers reported they were feeling more confident.
Economic Update: Retail Sales
Retail sales for April grew to $474.9 billion, an increase of 0.4 percent from March and 4.5 percent over April 2016’s retail sales, according to last week’s report from the Census Bureau.
While the gain was slightly short of retail analysts’ expectation for a 0.6 percent increase, many economists considered the gain an indicator that the consumer market was picking up pace after seeing sluggish performance over the past few months.
Key growth categories included non-store retailers, such as online stores and kiosks, which grew 1.4 percent; electronics and appliance stories, which enjoyed a 1.3 percent gain; and building material, garden and supplies stores, which saw a 1.2 percent increase.
Economic Update: Consumer Prices
Mirroring the gain in retail sales, consumer prices also bounced back with the Consumer Price Index for All Urban Consumers (CPI-U) growing a moderate 0.2 percent in April, according to week’s report from the Bureau of Labor Statistics. The index for all items less food and energy, also referred to as core inflation because it strips out the two most volatile categories, rose 0.1 percent.
Gains in prices for shelter, energy, tobacco, and food helped drive April’s increase in index for all items. The energy index rose 1.1 percent, with its sub categories all posting gains. The food index rose 0.2 percent, mostly thanks to a significant gain in prices for fresh vegetables.
April’s gains were a welcome change after March’s 0.3 percent loss in retail sales.,and many analysts welcomed the moderate inflation as a sign of continued growth in the consumer sector.
Economic Update: Consumer Sentiment
That feeling was shared by consumers, with consumer sentiment growing 0.7 percent to hit 97.7 in May, from April’s 97, the University of Michigan Survey of Consumers reported last week. Consumer market watchers had expected consumer sentiment to only hit 97.2 percent. Compared to last year, May’s figures were 3.2 percent higher than May 2016’s 94.7 percent.
While consumers were feeling better about the economy, that didn’t mean they were ready to go on any shopping sprees. While confident, they were also conservative.
“The recent stability in consumer sentiment, however, masks two important underlying shifts in the components as well as in the partisan divide,” a statement from the Survey of Consumers read. “More favorable income gains and low inflation meant that consumers held the most favorable real income expectations in a dozen years. Buying plans, however, were mixed: household durables rose to a decade peak, while vehicle buying conditions slipped to a three-year low.”