The numbers: Retail sales fell sharply in May and suggested the U.S. is no longer getting a big boost from massive federal stimulus, but consumers are still spending a lot more now than they did a year ago in a good omen for the economy.
Sales at U.S. retailer sank 1.3% last month, the government said Tuesday.
Economists polled by Dow Jones and The Wall Street Journal had forecast an 0.7% decline.
Sales were held down by fewer purchases of new cars and trucks. Automakers have struggled for months to produce enough vehicles to meet rising demand in the face of major global shortage of computer chips.
If autos are excluded, retail sales fell a smaller 0.7% in May.
Big picture: Retail sales have jumped up and down in 2021 because of the influence of a pair of pandemic-relief checks the government sent to taxpayers, but putting them aside, consumer spending is still quite healthy. Sales in May were 18% higher compare to the last month before the onset of the pandemic.
Economists predict sales will keep on going up. Americans have lots of savings, more people are going back to work and the economy is getting stronger.
Yet Americans appear to be shifting their spending away from goods and more toward services that were largely off limits during the pandemic: Sit-in dining at full-service restaurants, hotel stays, vacation rentals, plane flights and so forth.
Take eating out. Sales at bars and restaurants jumped 1.8% in May to mark the third straight increase and they now exceed precrisis levels. Restaurant receipts sank by a whopping 55% in the early stages of the pandemic and caused thousands of business failures.
Another not-so-rosy reason sales are rising: inflation. Higher prices are partly — but only partly — inflating the increase in sales.