Nominal spending on gas and groceries rose in April in tandem with price increases for both, Thursday’s update on US retail sales showed.

The figures, released two days on from a CPI report which featured another outsized jump on the gasoline index and the largest monthly gain since 2022 on the grocery gauge, nevertheless suggested American consumers remain largely undeterred by higher costs for necessities.

The retail sales control group — i.e., what matters for GDP forecasting — rose a better-than-expected 0.5% in April, Thursday’s data showed, the same advance as the headline gauge.

As a reminder, control group sales strip out car dealers, gas station receipts and food services.

The three-month annualized pace of control group spending’s nearly 8%. That’s the quickest since June of 2022, when headline inflation was 9% across the US.

That’s not to suggest consumers aren’t annoyed (they are) or that households aren’t “feeling the pinch” (they are). In fact, it may be to suggest the opposite. Rather, the point is that we’re not yet seeing the substitution effect where higher nominal outlays for gas and groceries torpedo spending for non-essentials. Nine of 13 major categories showed a gain in Thursday’s update.

One explanation says bigger tax refunds are a factor, but I don’t think that’s it. Donald Trump’s “One Big Beautiful Bill” accrued to everyday people as a — drumroll — $350 average bump, enough to cover a couple of grocery runs for a family of four, not enough to fund extra discretionary expenditures in the face of a big upswing in gas and grocery prices.

The bigger factor, I reckon, is record-high stock prices, record-high home prices and the wealth effect in the upper-half of the “K,” where well-to-do Americans aren’t all that concerned with the cost of energy and food. Because those expenditures simply don’t comprise as high a share of overall spending.

The figure below, which I highlighted last week, shows you the share of University of Michigan sentiment survey respondents who cited inflation while complaining about their personal finances, broken down by stock ownership.

The spread between the top stock owners and everyone else is nearly 15ppt, illustrating how equity ownership can ameliorate the psychological distress from higher consumer prices.

All of that said, headline inflation’s now outstripping wage gains, and overall consumer sentiment’s never been worse, so there’s certainly a lot of angst among the electorate. That’s reflected in Trump’s abysmal single-issue polling on the economy and inflation.

But for the time being, we’re just not getting that big downdraft in non-essential spending you’d expect if things were about to go off the rails in earnest.

Meanwhile, US jobless claims rose to 211,000 in the week to May 9, the Labor Department said. That was up from the prior week and more than expected (consensus was 205,000), but at 203,750, the four-week average is still so subdued it’s barely worth a mention.