U.S. Retail Spending Fell 1.3% in May

[mahatmakanejeeves]

Source: The Wall Street Journal.

ECONOMY U.S. ECONOMY

U.S. Retail Spending Fell 1.3% in May

Supply-chain disruptions and business reopenings are triggering a consumer spending shift

By Sarah Chaney Cambon
https://twitter.com/sechaney
[e-mail]
Updated June 15, 2021 8:54 am ET

Retail sales dropped 1.3% in May as shoppers pulled back on goods purchases and shifted more of their spending to services.

Consumers cut spending on autos, furniture, electronics, building materials and other items last month while boosting spending at restaurants, the Commerce Department reported on Tuesday, as more people got vaccinated against Covid-19 and business restrictions were further eased.

Consumers are venturing out as the pandemic fades, spending more at services businesses that were either shut down or operating with restrictions throughout the pandemic. Economists expect consumer spending to continue powering the economic recovery this year.

Spending, in part driven by government stimulus, has helped propel the broader U.S. economy, which grew at a 6.4% annual rate in the first quarter. Economists project that by the end of this year gross domestic product will reach the path it was projected to follow had the pandemic never happened—and then exceed it, at least temporarily.

Vehicles, however, are in short supply as a global computer-chip shortage has left car dealers with a dearth of inventory. As a result, auto sales likely fell last month. “If you don’t have products, you’ve got nothing to sell and that means lower revenues,” said Beth Ann Bovino, chief U.S. economist at S&P Global Ratings.

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Read more: https://www.wsj.com/articles/us-economy-may-2021-retail-sales-11623701250

[dweller]

1. Huh...

Consumer prices jump 5% in May, fastest pace since the summer of 2008

Consumer prices for May accelerated at their fastest pace in nearly 13 years as inflation pressures continued to build in the U.S. economy, the Labor Department reported Thursday.

The consumer price index, which represents a basket including food, energy, groceries, housing costs and sales across a spectrum of goods, rose 5% from a year earlier. Economists surveyed by Dow Jones had been expecting a gain of 4.7%.

The reading represented the biggest CPI gain since the 5.3% increase in August 2008, just before the financial crisis sent the U.S. spiraling into the worst recession since the Great Depression.
https://www.cnbc.com/2021/06/10/cpi-may-2021.html

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[bucolic_frolic]

2. Retailers try to maintain profit margins, make up for lost time, and restart costs a lot too

It takes capital to restock shelves. Capital being all but free - 1.5% - manufacturers are aware and raise prices too. Luring personnel back to work. But mostly it's all about serving capital - owners.

Payrolls are still off pre-pandemic highs. Stim ending. Don't expect spending to surge anytime soon.

[IronLionZion]

3. People are buying up houses and used cars like crazy

it shows the complexity of the economy and how people fared differently during the pandemic. Many of the WFH types saved money and continued to earn income and have plenty to spend now. Others lost income and won't be back on their feet for some time yet.

The folks who WFH but now are going back to the office might be purchasing cars to avoid public transit. Transit use is still way down in many cities.

[Crowman2009]

4. I've been trying to get my savings back on track. As in one-year's worth of gross income.

So spending on anything other than necessities, the Criterion channel subscription, and paying down my auto loan is a no-no.