Retail sales grew at a slower pace than expected in May, as high interest rates and inflation continued to weigh on consumers.
Retail sales rose 0.1%, less than the 0.3% expected by economists. Retail sales fell 0.2% in April, according to revised data from the Commerce Department.
Excluding autos and gas, retail sales rose 0.1%, below estimates of a 0.4% rise but more than the 0.3% decline in April.
Paul Ashworth, chief North America economist at Capital Economics, said Tuesday's retail sales data indicated “consumers are struggling a bit.”
“The soft retail sales data for May supports our view that GDP growth remains slightly sluggish in the second quarter, following a disappointing first quarter performance,” Ashworth said.
According to the report, the biggest drop was at gas stations, which fell 2.2% from the previous month. Furniture and home stores also saw their sales fall by 1.1%. Meanwhile, sporting goods and hobby stores saw the biggest gains, with sales rising 2.8% from the previous month.
The report comes less than a week after the Federal Reserve's revised Summary of Economic Projections (SEP) showed the central bank anticipates one interest rate cut this year. The commitment to high interest rates for longer than many expected has economists concerned that restrictive policy could lead to a significant slowdown in the US economy.
Mohamed El-Erian, Allianz's chief economic adviser, told Yahoo Finance on June 13 that if the Fed delays a rate cut in December, the balance of risks “is heavily in favor of it being too late and the economy slowing down more than expected.”
Josh Shaffer is a reporter for Yahoo Finance. Follow him on X @_joshshaffer,
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