U.S. May retail sales rose 0.9% MoM vs. 0.5% expected, the Commerce Department’s
Census Bureau said, a print that may lose momentum as the boost from large tax
refunds fades. Part of May’s gain reflected higher gasoline receipts after
prices earlier spiked to a four-year high amid the Iran war; gasoline has since
retreated and the national average this week fell below $4/gal for the first
time since April. Core retail sales—excluding autos, gasoline, building
materials and restaurants—rose 0.7% in May (April +0.5%), the series that most
closely maps to GDP consumer spending. Tax refunds and a stronger stock market
have jointly supported outlays, but the increase has been partly financed by
lower savings: the household saving rate fell to a four-year low in April. Tax
season has ended and much refund funding has been spent. PNC Financial
economists say internal data show households are depleting refund balances
faster than in prior years, with higher gasoline spending the main driver.
