May's Retail Sales Fall Short of Expectations, April's Figures Revised Downward

Analysts Predicted a Return to Growth

The team of analysts at Bank of America, known for their near-perfect forecasting, were in agreement with the general consensus this month, predicting a return to growth in US retail sales for May. This followed a less impressive performance in April.

Over-Optimism Leads to Disappointment

However, both the consensus and Bank of America were overly optimistic. The headline retail sales for May only saw a 0.1% month-on-month increase, falling short of the expected 0.3% rise. To make matters worse, the previously reported 0.0% change in April was revised to a 0.2% month-on-month decline. This leaves the headline retail sales figure up by a mere 2.3% year-on-year.

Excluding Autos, the Situation is Even More Grim

When auto sales are excluded from the calculation, the picture becomes even bleaker. Sales dropped by 0.1% month-on-month, as opposed to the expected 0.2% increase. When both auto sales and gas stations are excluded, sales only rose by 0.1% month-on-month, falling short of the expected 0.4% rise. Spending at gas stations and food services were the main contributors to this decline.

The Control Group Also Disappoints

The crucial control group, which is used in the GDP calculation, also fell short of expectations in May, and April's figures were revised downward. This is not a promising start for the second quarter's GDP, with figures for April and May at -0.5% and +0.4% respectively.

Real Retail Sales Decline in May

Lastly, when the nominal retail sales figure is adjusted for inflation (using the CPI), we see that real retail sales actually declined in May.

Final Thoughts

These disappointing figures are a stark reminder of the unpredictability and volatility of the retail market. It raises questions about the effectiveness of current economic policies and their impact on the retail sector. What are your thoughts on these recent developments? Do you think the retail sector will bounce back in the coming months, or is this a sign of a deeper issue? Share your thoughts with your friends and sign up for the Daily Briefing, which is delivered every day at 6pm.