Retail Sales Disappoint in April as Consumers Curb Spending

May 17, 2024

Americans were unexpectedly reticent to spend in April, as inflation continued to stretch budgets and high interest rates made taking on debt more difficult.

Retail sales were unchanged between March and April, according to the Census Bureau. That came as a distinct surprise to the economists polled by Reuters who had been expecting a 0.4% increase. That is a significant slowdown in spending growth from March’s downwardly revised 0.6% gain, itself a slowdown from February’s 0.9% gain. The year’s retail sales reports paint a potentially worrying trend of slowing consumer activity.

Retail sales figures, which include spending in-store, online, and at restaurants, are not adjusted for inflation. So, sales holding steady during a month when inflation was up 0.3% suggests that consumers are cutting back on non-essentials to maintain spending levels as prices rise.

The sector that saw the biggest monthly increase was spending at gas stations, which jumped 3.1% in April from March. That is likely a result of surging gas prices in recent months. When auto sales and gas station spending are excluded, retail sales fell 0.1% for the month.

Most sectors saw monthly declines in spending. The biggest decline was online retail sales, which fell 1.2% 

The month’s disappointing retail sales come on the heels of a jobs report that showed the unemployment rate ticked higher as another sign of a slowing economy. Whether it is slowing enough to bring inflation down to the Federal Reserve’s 2% target remains to be seen. 

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