Retail sales in April were unchanged from March as inflation continued to sting and elevated interest rates made taking on debt more burdensome.
The number, which came in well below economists’ expectations, followed a revised 0.6% pace in March, according to Commerce Department data released Wednesday. It rose 0.9% in February. That comes after sales fell 1.1% in January, dragged down in part by inclement weather.
Excluding gas prices and auto sales, retail sales fell 0.1%
Online sales were down 1.2%, while business at electronics stores was up 1.5%. Sales at home furnishings stores slipped 0.5%.
The data offers only a partial look at consumer spending because it excludes things like travel and lodging. However at restaurants, the lone service category tracked in the monthly retail sales report, sales rose 0.2% from March.
There have been some hints that the Federal Reserve’s campaign to cool inflation by reining in spending may be taking hold. Employers pulled back on hiring in April adding 175,000 jobs, still a solid number, but down sharply from the surprisingly strong 315,000 hires in March.
Still, inflation remains a concern.
Consumer inflation in the United States cooled slightly last month after three elevated readings, likely offering a tentative sigh of relief for officials at the Federal Reserve as well as President Joe Biden’s re-election team.
Prices rose 0.3% from March to April, the Labor Department said Wednesday, down slightly from 0.4% the previous month. Measured year-over-year, inflation ticked down from 3.5% to 3.4%. And a measure of underlying inflation, which excludes volatile food and energy costs, also eased in April.
Inflation had been unexpectedly high in the first three months of this year after having steadily dropped in the second half of 2023. The elevated readings had dimmed hopes that the worst bout of inflation in four decades was being rapidly tamed. That has weighed on consumer confidence.
U.S. consumer sentiment fell in May to the lowest level in six months with the leading cause cited by Americans being inflation and interest rates, as well as rising anxiety about unemployment despite the very health job market.
Just how Americans are spending offers some clues about their mindset in this environment of plentiful jobs and higher costs. Spending online rose 7% for the first four months of the year, according to Adobe Analytics, but a lot of that money is going towards cheaper versions of personal care goods, electronics, clothing, furniture and groceries.
People continue to spend, but increasingly they’re looking for bargains.
The share of sales for the cheapest apparel online jumped from 36% in April 2019 to 53% in the same month this year, according to Adobe, while the market share of the most expensive apparel was more than halved, making up just 9% in the same time frame.
That trend is playing out in the most recent quarterly financial reports from retailers.
Home Depot, the nation’s largest home improvement retailer, said Tuesday that sales declined for the third consecutive quarter to start 2024 as homeowners and prospective buyers wrestled with higher mortgage rates and inflation.
Starbucks last month lowered its sales expectations for the year as visits to its coffee shops slow worldwide. The decline in spending at U.S. stores was even worse than it had anticipated.
To combat slowing sales, McDonald’s said late last month that it will begin rolling out more deals for customers after the burger giant realized people people were eating out less often in many of its biggest markets.
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AP Economics Writer Christopher Rugaber in Washington contributed to this report.
