Jul 15, 2022 09:48AM ET
By: AnalysisWatch
U.S. retail sales rose strongly in June as Americans spent more on gasoline and other goods in the face of rising inflation. That could allay fears of an impending recession, but it doesn't change the view that economic growth was lukewarm in the second quarter.
The Commerce Department said Friday that retail sales rose 1.0% last month. Data for May was revised upward to show sales fell 0.1% instead of the previously reported 0.3%.
Economists polled by Reuters had forecast a 0.8% increase in retail sales, with estimates ranging from a 0.2% decline to a 2.2% increase. Retail sales consist mainly of goods and are not adjusted for inflation.
Annual consumer prices rose 9.1% in June, the most since November 1981, putting the Federal Reserve on track for another 75 basis-point rate hike later this month. The Fed has raised its benchmark rate by 150 basis points since March.
Sales at gas stations rose 3.6%. According to the AAA Motorists Association, gasoline prices jumped in June, averaging more than $5 per gallon. Prices at the pump have since retreated from last month's record highs, averaging $4.577 per gallon on Friday.
Online retail sales rose 2.2%. Electronics and appliance retail sales rose 0.4%. However, sales at building materials, garden equipment, and supply retailers fell 0.9%.
Core retail sales most closely match the consumption component of gross domestic product. Despite the increase in June, inflation-adjusted core retail sales were weaker, suggesting that consumer spending likely stalled last quarter.
Estimates for second-quarter GDP range from a 1.7% annualized decline to 1.0% growth. The economy contracted at a rate of 1.6% in the first quarter due to a record trade deficit.