US retail sales were unchanged in April, data out Friday showed. Consensus expected a 1% gain.
The disappointing read on consumption comes on the heels of a stimulus-fueled spending spree and may serve to dampen the “boom” narrative just as concerns over rising consumer prices take center stage. March’s blockbuster gain was revised higher.
Ex-autos, sales fell 0.8% last month. The market wanted a 0.6% gain.
The control group missed too, dropping 1.5% against expectations for a relatively tame 0.4% decline.
It’s not terribly difficult to spin a dour narrative. Clearly, figures for January and March were bolstered by stimulus checks. Lackluster reads for February and April suggest the US consumer is unwilling (or unable) to spend absent the disbursement of free money. On top of that, you could argue that surging consumer prices were a further impediment. And don’t forget about April’s underwhelming jobs report.
That all has a stagflationary vibe to it, and I imagine some folks will be keen to run with that story. Perhaps it’s a semblance of true. But it could be that consumers bought what they wanted (or needed) in March with their stimulus checks and simply took a breather in April.
“This is consistent with our notion that much of the upside from fiscal stimulus has been front loaded into the first quarter,” BMO’s US rates team said.
Meanwhile, import prices rose 0.7% MoM, slightly more than expected. The YoY print was 10.6%, also a bit hotter than consensus.
On balance, I doubt the above actually changes anything. Americans are still purportedly sitting on “excess savings,” which are expected to drive consumption over the summer as the economy reopens in earnest.
That said, there’s an argument to be made that those with the highest marginal propensity to consume aren’t actually sitting on large savings buffers. And if they are, rising prices could eat into them in a hurry.