Retail Sales Strong in April Despite Inflation
Washington, DC, May 18, 2022-Americans continued to pump money into the U.S. economy in April, with increased retail spending offering the latest sign consumers are driving demand at stores and manufacturers despite the pinch from high inflation, reports the Wall Street Journal.
“Retail sales-a measure of spending at stores, online and in restaurants-rose a seasonally adjusted 0.9% last month compared with March, the Commerce Department said Tuesday. That marked the fourth straight month of higher retail spending.
“Retail sales aren’t adjusted for inflation. That means that while consumers have continued to spend more, they are getting less due to rapidly rising prices.
“Consumers spent more at restaurants and bars and boosted expenditures on vehicles, furniture, clothing, and electronics. They cut spending sharply on gasoline in April as pump prices pulled back briefly from a run-up related to the war in Ukraine.
“Economists said the figures showed the highest U.S. inflation in four decades and uncertainty from the Ukraine war haven’t deterred consumers from spending, which makes up the bulk of economic output. The U.S. is also experiencing a historically tight labor market-with April marking the 12th straight month of solid job gains-adding to positive signs for the second-quarter performance by the U.S. economy.
“‘Today’s numbers suggest that domestic demand momentum is very robust,’ said ING economist James Knightley. That gives the Fed a green light to keep raising interest rates, he said, as part of its most aggressive effort in decades to curb upward price pressures.
“Federal Reserve Chairman Jerome Powell, in a Tuesday appearance at The Wall Street Journal’s Future of Everything Festival, said the Fed was tightly focused on bringing down inflation that is running at a 40-year high.
“‘We need to see inflation coming down in a convincing way,’ Mr. Powell said. ‘Until we do, we’ll keep going.’
“Mr. Powell and his colleagues have raised interest rates twice this year-most recently by a half percentage point. The Fed faces a tricky task curtailing high inflation without spurring a large rise in unemployment and triggering a downturn.”