Retail sales fell 1.3% in May on a month, while analysts expected a decline of just 0.6%.
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The pandemic seems to be nothing more than a bad memory for American consumers, but supply difficulties and rising prices are preventing the economy from restarting at full speed, a topic that should be at the heart of the meeting of the Dederal reserve (Fed) Tuesday and Wednesday.
Retail sales fell in May, for the first time since February. The total amounted to $ 620.2 billion in May, down 1.3% from April, according to data released Tuesday by the Commerce Department. This drop is much stronger than expected by analysts (-0.6%).
In particular, the sales of new cars which fall (-3.7%), since manufacturers are forced by the global shortage of semiconductors to slow down, despite a still very high demand.
Life has resumed in the United States, with the summer weather helping, and now that nearly half of the population is fully vaccinated.
But the sectors that had shone during the crisis are now shunned by consumers: sales are down for home furnishings (-2.1%), household appliances (-3.4%), gardening and construction materials (-5.9%).
Conversely, bars and restaurants are regaining their clientele (+ 1.8%), after having suffered particularly for a year.
And now that American consumers are leaving their homes again, they also need to renew their wardrobes: clothing and accessories stores have seen their sales jump by 3%.
Retail sales are expected to experience difficult months, which should “not be seen as a sign of household mistrust but rather a sign that vaccinated consumers are redirecting their spending towards services,” said Lydia Boussour, analyst for Oxford Economics, in a note.
Indeed, travel, concerts, leisure … The services which, with the reopening, capture an increasingly important part of the money of American households, are not counted in these figures.
Concerns about purchasing power
In addition, warns Ms. Boussour, “the prices of goods weighed on the purchasing attitudes of consumers.”
American households are indeed worried about their purchasing power, as prices are rising.
The selling prices of products made in the United States and services provided by American companies also reached a record in May, according to the PPI index released Tuesday by the Department of Labor.
The price increase in May was the strongest in 13 years, + 5% over one year, according to the CPI index. The Fed uses another measure of inflation, the PCE index, which in April experienced its strongest acceleration since 2007, + 3.6% over one year.
The risk posed by inflation will undoubtedly be discussed at the meeting of the Monetary Committee of the US Central Bank (Fed), which began Tuesday morning and will end Wednesday noon.
The monetary institution has so far insisted that the rise in prices is temporary, anticipating inflation around 2%, its target, from 2022. But concerns persist, and its comments on the subject are eagerly awaited.
Fed officials also want the country to regain full employment before acting. Because if the unemployment rate fell to 5.8%, it remains very far from the 3.5% before the crisis, and there is still 7.6 million jobs missing compared to this period.
No change is therefore expected, both for key rates, which should remain in the 0 to 0.25% range for a while, and for asset purchases, the pace of which should be maintained.
But officials at the Washington monetary institution could give some hints as to when they plan to reduce the Fed’s support to the economy.
They will also publish economic forecasts – growth and employment – which are likely to improve. They will also give their last inflation projection which will be scrutinized by economists.
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