Retail sales saw a significant decline in May, dropping 0.9% as consumers curtailed spending in anticipation of President Trump's tariffs on imports. Auto sales, which previously surged in March, led the decline, contributing to a notable 3.5% drop. Despite this, discretionary spending showed resilience with categories excluding volatile items rising by 0.4%. Economists anticipate consumer spending to grow in the coming months despite rising uncertainty, while unemployment remains low and inflation is decreasing, suggesting that consumers are still engaged in some spending despite a cautious approach.
Retail sales fell sharply in May as consumers pulled back from a spending surge early this year to get ahead of President Donald Trump's sweeping tariffs on nearly all imports.
Today's data suggests consumers are downshifting, but they haven't yet slammed the brakes... consumer spending has been resilient in the face of tariff uncertainty.
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