WASHINGTON (NYTIMES) – Retail sales fell more than expected last month, the US Commerce Department reported on Tuesday (June 15), a sign of the uneven recovery of the American consumer and a shift in spending patterns as the country reopens after the coronavirus pandemic.
The 1.3 per cent decline in May followed months of ups and downs in retail spending.
After falling to record lows about a year ago, sales bounced back sharply this spring, only to swing from month to month, driven by the ebb and flow of government stimulus and the persistence of the virus. The data from April was revised Tuesday to show an increase of 0.9 per cent.
Still, economists said that the broader recovery remained on track. Rather than signaling a fundamental weakness, last month’s spending data shows that consumers have most likely spent all they need to furnish their homes or upgrade their phones during the homebound months of the pandemic. Now, they are shifting their purchases to restaurants, lodging and travel, as vaccination rates rise and people feel safer venturing out.
“The decline was a bit of a shock,” said Beth Ann Bovino, US chief economist at S&P Global. “But there are reasons I am not worried.”
For one, buying has climbed to record levels over the past several months and well above what consumers were spending before the pandemic, Ms Bovino said. Another factor weighing on spending last month was limited supply, particularly of automobiles. Auto sales fell 4 per cent in May.
Economists say consumers are undergoing a “rotation” of their unusual pandemic spending patterns. It began in the lockdown months of the pandemic with huge jumps in grocery purchases and plummeting restaurant revenue. As the time at home dragged on, many people took on renovation projects, upgraded their furniture and entertained themselves with new electronics and sporting goods.
Last month showed another shift. Spending on furniture declined 2.1 per cent, while electronics and appliance purchasing fell 3.4 per cent. Purchases at restaurants and bars rose 1.8 per cent. Consumers spent more on clothing and accessories last month, partly reflecting the need to dress up to go back into gradually reopening offices after months of remote work. Department stores sales rose 1.6 per cent.
With so many caveats in the retail sales report, Ian Shepherdson, chief economist at the Pantheon Macroeconomics, said the data was not that helpful.
“The headline declines in today’s numbers tell us nothing about the future,” Mr Shepherdson wrote in a research note.