The Commerce Department released its monthly sales tally, and the numbers came in strong. Retail sales were up 1.0 percent over April. The department's figures are adjusted for seasonal variation and holiday and trading-day differences, but not for price changes. The stimulus checks seem to have played a big role in helping to boost spending. That big question the report raises for me is how much of the gain is due to the rises in food and fuel prices, which have been jumping a lot in recent months.
Retail sales in the U.S. rose twice as much as forecast in May as Americans used their tax rebates to shop at electronics and department stores, and record gasoline prices swelled service-station receipts.
Purchases climbed 1 percent, the most since November, following a 0.4 percent gain the prior month that was previously reported as a drop, the Commerce Department said in Washington. Purchases excluding gasoline increased 0.8 percent last month.
The figures indicate the government's stimulus plan and the Federal Reserve's seven interest-rate cuts since September are benefiting retailers such as Wal-Mart Stores Inc. and keeping the economy growing. The report bears out Fed Chairman Ben S. Bernanke's assessment this week that risks of a "substantial downturn'' have receded.
"The gain is largely because of the rebate, but maybe the American consumer is just hanging in a lot better than we anticipated,'' said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "It casts more doubt on whether the economy is in a recession.''