American retail spending proved resilient in April, rising 0.5% on the back of soaring gasoline prices and bolstering the U.S. dollar against other major currencies. The data suggests consumer spending, which accounts for roughly two-thirds of all U.S. economic activity, remains firm despite persistent inflation and pessimistic sentiment.
"Consumers aren’t in a recession, but they’re not powering the economy either," David Russell, global head of market strategy at TradeStation, wrote in a commentary. "Higher inflation, tariffs and demographic changes have taken a toll on retail spending as a growth driver."
The headline figure, which was in line with forecasts, was heavily influenced by a 2.8 percent month-over-month surge in sales at gasoline stations, according to Census Bureau data. Excluding the impact of higher fuel costs, retail sales climbed a more moderate 0.3 percent. The report showed a mixed picture across sectors, with spending falling 2 percent at furniture stores, 1.5 percent on clothing, and 0.4 percent on autos and parts.
The steady spending indicates that while households are feeling the pinch from the highest inflation since 2023, it has not yet led to a broad pullback in consumption. However, pressures are expected to build. With energy prices likely to remain elevated and wage growth failing to keep pace, household purchasing power will continue to erode, running the risk of softer spending growth in the second half of the year.
This article is for informational purposes only and does not constitute investment advice.
