Retail Sales are Flat-Out Strong

The announced death of the consumer was once again premature. May retail sales jumped 1.0%. Excluding gasoline sales (impacted by price), the increase was a still very strong 0.8%. The total excluding auto sales was 1.2%, as auto sales once again lowered the total figure.

The April changes were also revised sharply higher. Total retail sales were revised to an increase of 1.0% from an originally reported 0.5%, and excluding autos the increase is now at 0.4% from an originally reported -0.2%.

Coupled with the strong May same-store sales gains for retailers, these data should convincingly show that the fiscal stimulus and regular spending trends are not being completely destroyed by higher gas prices.

It is likely that consumer spending in June and July will also post good gains. The good trend on consumer spending as the second quarter begins greatly reduces the risk of a very weak second quarter real GDP gain. It is likely that forecasts will start to climb to the 1.5% to 2% range.

These data are clearly strong.