Consumers are still the fuel that’s powering the United States’ economy as retail sales figures for May 2023 went up by 0.3% from where they were in April.
According to the latest report from the US Commerce Department, more money was spent at both online and brick-and-mortar stores, as well as dine-in restaurants last month. This bucks previous expectations that retail would experience a 0.1% decline in the middle of the second quarter.
This is also proof that, despite economic uncertainty and the Federal Reserve’s seemingly constant rate hikes, US consumer spending has remained resilient.
With the exception of gas stations and stores dealing in miscellany, growth was seen in practically all retail categories as overall spending saw an acceleration of around 0.6% and overall sales were up by 1.6% from where they were last year.
Building and gardening products were among the most popular buys last month, posting around 2.2% in growth.
Experts also noted that foot traffic at brick and mortar retailers has grown stronger after pandemic restrictions were relaxed. This has prompted some to say that American consumers do not appear to be adversely impacted by the country’s current economic woes.
But for how much longer is anybody’s guess. Economists pessimistically believe that American consumers may soon be tapping out in light of vastly increased interest rates coupled with tightening credit as well as the impending resumption of student loan payments.
Likewise, many in the lower income brackets have lost the perks of pandemic relief, and numerous households will be unable to sustain their spending habits at current levels.
That said, the Federal Reserve reported in its latest Summary of Economic Projections that economic output this year will be weaker than last year’s. Indeed, Fed chair Jerome Powell remarked that the US economy faces the repercussions of tighter credit conditions for both private citizens and corporate taxpayers, and these will weigh heavily on the country’s economic activity moving forward.
