Retail sales rose 1% in June from May as shoppers showed resilience despite inflationary pressures.
NEW YORK — Consumers picked up their spending from May to June, underscoring their resilience despite painfully higher prices at the gas pump and in grocery aisles and allaying fears that the economy might be on the verge of a recession.
At the same time, last month’s spending gain is modest enough that it likely won’t encourage the Federal Reserve to raise interest rates even more aggressively. Stock prices rose after the report’s release. Kathy Bostjancic, chief U.S. economist at Oxford Economics, said that excluding inflation, retail sales still rose about 0.3% in June, up from a contraction of 0.4% in May. She expects the economy to grow at a slim 0.5% annual rate in the April-June quarter, after shrinking in the first three months of the year.
But spending is volatile. The latest round of retail earnings reports published in May showed some slowing of spending, particularly with low income shoppers. RH, an upscale furniture chain, cut it sales outlook for the year last last month, pointing to deteriorating macro-economic conditions. It pointed to higher mortgage rates, which are slowing sales of luxury homes, indicating that even wealthy shoppers are pulling back.
Some economists believe inflation might be reaching a short-term peak. Gas prices, for example, have fallen from $5 a gallon reached in mid-June to an average of $4.57 nationwide Thursday — still far higher than a year ago.
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