May 2024 data on US retail spending shows a rise of just 0.1% as persistently high inflation tightens purse strings. This insubstantial increase reportedly came in one-tenth of a percentage point lower than the predicted Dow Jones estimate.
Latest US Retail Spending Weaker In Face Of High Inflation
According to CNBC, the US Department of Commerce stated that retail spending was “adjusted for seasonality but not inflation”. This performance was, however, better than the April 2024 0.2% drop. Compared to the retail spending a year ago, the latest was up by 2.3%.
Fuel spending dipped by 2.2%, but the 2.8% hike recorded by sports gear, music and book outlets balanced this loss. E-commerce also picked up by 0.8%, while eateries and pubs experienced a 0.4% decline.
Stocks had an ambivalent response to this financial report and US Treasury yields decreased. The retail spending report did little to ease investor tensions, as there is already tension about the overall economy and the US Federal Reserve’s stance around interest rates.
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According to analysts, consumer spending accounts for roughly two-thirds of economic activity. A decline may signal slower growth and may urge the central bank to look at interest rate cuts.
CNBC indicated that the current market pricing hints at a possible two rate cuts during the latter half of 2024. The present status quo may prompt two interest rate reductions of 0.25% each. The latest indications from the US Federal Reserve, however, point to only one rate cut.
Investors and consumers are holding a collective breath, waiting to see how the US central bank will react to this data.
