Retail Sales Down, Again, in April, As Americans Cut Back on Spending

Retail sales in the United States fell, unexpectedly, mostly on household draws from motor vehicle purchases and a handful of other goods. Experts now say that this is in an indication that an economic slowdown is on the way, despite what has become a temporary boost from exports and first quarter inventories. 

In addition, moderation in US economic activity is supported by other data, Wednesday, to show a notable drop in industrial production within the last month. Apparently the economy has lost pace after the White House’s $1.5 trillion tax cut package stimulus ran down. 

Also, the United States Department of Commerce comments that retail sales slipped 0.2 percent last month.  Compounding the data from March—which has been upwardly revised—retail sales surged 1.7 percent, instead of what had been previously reported (1.6 percent). That is the largest such increase since September of 2017.

It should be noted that these figures also reflect weakness in the retail category that includes online sales and suggests that spending remains weak after the softest quarterly increase in the past year. There is some hope that this might solidify some pressure from US President Donald Trump and international market to reduce borrowing costs in the midst of surprisingly low inflation. Of course, Federal Reserve policy makers continue to wait patiently for steady job and income growth, which should lift in the next few months to support more purchasing.

All this really tells us is that economists are not having an easy time determining the mood of consumers this year.  After all, retail sales have been up and down; starting off the year at quite a healthy pace but then falling only a month later, and then jumping up again in March, and down again in April. Analysts simplify the rise-and-fall course as Americans being reluctant to spend freely; or that Americans are simply cutting back on frivolous expenses.  

Analysts watch retail sales very closely because they actually make up one-third of all consumer spending, which is a major contributor of American economic activity. Overall, this sector—which includes spending on services (like travel and haircuts)—jumped up in March by its biggest margin in nearly ten years.  This came after only very small gains from the months before.  

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