By Alice Seeley
Despite the increased prices of goods, consumers kept spending in April as retail sales rose about in line with Wall Street expectations. The Commerce Department reported on May 17 that monthly sales rose 0.9% overall in April, just below the Dow Jones estimate of a 1% increase but in line with expectations from Refinitiv economists.
This increase in retail sales has not been adjusted for inflation, which means that consumers may be spending more but are receiving fewer goods for their money. This rise in sales was caused by spending at bars, restaurants, cars, clothing, furniture, and electronics. According to the Census Bureau, sales at restaurants, bars, and retail stores totaled $677.7 billion in April, up $1.1 from March.
Future reports on consumer spending are extremely important to economists because they indicate how consumers are grappling with inflation and higher interest rates.
“Despite the surge in prices weighing on their purchasing power, the U.S. consumer now appears to be single-handedly keeping the global economy afloat,” Paul Ashworth, an economist at Capital Economics, wrote.
The report of April spending is an early estimate of spending during a month when prices rose 0.3 percent from the prior month. This rapid pace of inflation caused companies to raise the prices of their products to cover the higher costs of manufacturing. PepsiCo and Coca-Cola are just a few of the companies to do so already.
Considering that consumers have not been deterred by inflation yet, Marwan Forzley, CEO of Veem, stated that “with the expected travel boom later this year, I don’t anticipate this sentiment to change as we head into the next report. Consumers are eager to travel, and the warmer months contributed heavily to strong retail performance in April, a good sign for seasonal businesses.”
