US Retail Spending Unexpectedly Drops in Troubling Economic Indicator
Retail sales in the United States fell during May, ending a five-month series of gains.
Data released Wednesday by the Department of Commerce showed that retail sales fell by a seasonally-adjusted 0.3 percent.
Retail sales include the money citizens, and residents spend shopping at brick-and-mortar stores and e-commerce websites, on restaurants and automobile purchases, among other things.
Once adjusted for inflation, the figure translates to more than a one-percent decrease in real retail sales, MarketWatch reported.
A fall in automobile sales has been a significant driver behind the decrease in retail sales.
A combination of high gas prices, low inventory due to supply-chain hiccups and rising interest on car loans have forced Americans to rethink their purchase of new vehicles.
If one excludes automobile and gasoline sales from their calculations, retail sales have risen by 0.1 percent in May, the Wall Street Journal reported.
While declining vehicle sales indeed played a significant role in reducing retail sales figures, Americans also cut back on other items.
These include furniture, electronics, appliances and health and personal care products.
The data from the Commerce Department showed that gasoline sales have risen by 4 percent since April. The figure indicated that gasoline purchases occupied a larger share of American consumer spending.
The national average price of gasoline has been increasing over the last few weeks, crossing $5 and standing at $5.014 as of Wednesday, according to the American Automobile Association.
To put things into perspective, the national average gas price was $4.955 a week ago, $4.470 a month ago, and $3.076 a year ago.
States on the nation’s West Coast suffer from the highest gas prices, with gasoline selling in California at $6.435—the nation’s highest.
If the fall in demand persists due to inflation, the U.S. economy could take a significant hit. According to MarketWatch, nearly 70 percent of economic activity in the country comes from consumer spending.
The ongoing economic woes have been a source of worry for Democrats ahead of the 2022 midterm elections, as a looming recession has undermined the Biden administration’s ability to project its time in power as a period of economic progress and “Build Back Better.”
In an attempt at damage control, President Joe Biden has recently resorted to a blame game, pointing fingers at large corporations and Russian President Vladimir Putin for the gas prices and inflation.
As of Wednesday, 56 percent of Americans said they disapproved of Biden, according to data from Reuters.
Biden’s approval ratings, which currently stand at 39 percent, have been approaching a record low in recent weeks, Reuters reported.
Nine out of ten Americans are worried about the speed at which prices around the country are rising, an April CBS News/YouGov poll found.
Around 69 percent of Americans, according to the poll, disapproved of the way Biden is handling inflation.
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