May 2018 Retail Sales

Second quarter gross domestic product (GDP) received a big boost in May 2018 from Retail Sales.  According to the Census Bureau, this large indicator (representing roughly one-fifth of the economy) jumped 0.8 percent in the period.  Not only was May’s figure strong, but April’s tally was upwardly revised, further goosing the current quarter’s GDP statistic. 

Over the past year, retail sales have risen 5.9 percent.  Perhaps you’re thinking gas prices influenced this strong tally, and you’d be right.  But even after removing petrol purveyors from the figure, retail sales have grown 5.0 percent.  Aggregate economic output looks healthy.

Digging deeper into the details reveals broad participation in the monthly figure.  Spending on clothing rose 1.3 percent.  General merchandisers sold an additional 1.2 percent, including a 1.5 percent increase at brick-and-mortar department stores; nonstore retailers only edged up 0.1 percent.  Miscellaneous store retailers increased revenues by 2.7 percent (who knew miscellaneous were so popular this time of year?).  Do you know what else is popular in the spring?  Building material and gardening stores; they jumped 2.4 percent in May.  Sound fun so far? Just wait.

Atlas’ favorite category was also strong.  Food services & drinking places experienced a 1.3 percent rise in their receipts.  We pay particular attention to this line item because it can be easily substituted for meals at home if the economy begins to falter. No signs of that happening yet. 

May was a strong period for retailers.  Consumers continue driving this economy.  Low unemployment certainly supports the cause.  From the vantage point of retail sales, the American business cycle remains in the virtuous portion.  It will not last forever, but there are few signs to suggest the end is near.