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Retail sales rose sharply in April as consumers bought more vehicles and spent more at restaurants, providing a strong boost to the US economy at the start of the second quarter.
This increase in retail sales shows how demand remains strong amid the worst inflation data in four decades, according to the United States Department of Commerce, something that for now allays fears of an impending recession.
Economists explain this figure by the increase in wages, which have risen due to labor shortages and the savings accumulated during the pandemic that still drive this spending. In that country there are two job vacancies for every unemployed person.
The data shows that consumers are also increasing their use of credit cards. But the strength of spending means the Federal Reserve will have to stick with its plan to cool demand.
The value of total retail purchases rose 0.9% in April, according to figures from the Commerce Department. Excluding vehicles and gas stations, sales grew 1% last month. American spending continues at a brisk pace, even as prices post their biggest gains in four decades.
The data shows that consumer use of credit cards is increasing, although this strength is a sign that the Federal Reserve will have to maintain its plan to cool demand by raising interest rates.
“Strong retail sales should limit concerns about downside risks to growth and keep Federal Reserve officials firmly focused on raising interest rates to deal with too-high inflation,” said Matthew Massicotte. , economist at ‘Citigroup’ in New York.
“At some point, rising prices will dampen consumer demand and slow inflation, but for now strong tailwinds from nominal income growth and available consumer credit are driving demand,” he added.
Sales increased by 8.2% in year-on-year terms. The increase in retail sales in April reflected both strong demand and rising prices and was in line with economists’ expectations.
The increase in retail sales was led by auto dealers, which rebounded 2.2% after falling 1.6% in March. Likewise, it offset the 2.7% drop in sales at gas stations.
The National Retail Federation celebrated the sales data as a sign of consumer resistance, although they asked the White House and the United States Congress to lift tariffs on Chinese products, as well as pass laws to solve the problems. in the supply chain and manage immigration reform to alleviate the tight labor market.
with Reuters
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