Consumption fell more than analysts expected. The data adds more uncertainty to the markets, concerned with the climbing in the tension in the Middle East.
Consumption in the United States suffered an important contraction in May. It happened in the middle of a strong reduction of expenses, punctually in cars, after the jump that had taken place in March to anticipate the tariff boom of President Donald Trump.
Sales in retail stores and restaurants decreased 0.9% in the fifth month of the year, the US Department of Commerce reported Tuesday, after a decrease of 0.1% in April. The fall in car consumption explained much of this negative variation, after Americans increased the purchase of vehicles in March to anticipate Trump’s 25% tariff.
Excluding cars, sales fell 0.3%, highlighting a decrease of 2.7% in home and garden centers. In electronics and appliances stores sales sank 0.6%, and in supermarkets 0.7%. As positive notes, 0.9% increased in online retailers, 0.8% in clothing stores and 1.2% in furniture stores.
The fall in sales occurred after strong decreases in consumer confidence this year. Even so, inflation has cooled constantly and unemployment remains low, which could boost a constant expense in the coming months, since the economy has remained mostly solid.
Economists surveyed by Reuters had predicted that retail sales, which are mostly of goods and do not fit inflation, would decrease 0.7% after the increase of 0.1% recorded in April.
The market, expectant at oil prices and Fed rates
The lean data of consumption in the US negatively impacts financial markets, whose main concern is the escalation in the war between Israel and Iran.
Last month’s sales were also stopped by lower income at service stations due to a decrease in gasoline prices.
Trump’s overwhelming tariffs have raised fears about world growth and braking oil prices, but Hostilities between Israel and Iran have promoted crude oil prices. The unusually cold climate probably also harmed sales.
In this context, Fed officials began a two -day monetary policy meeting on Tuesday. The American Central Bank is expected to maintain its reference interest rate to one day without changes in the range of 4.25%-4.50%while political leaders supervise the economic impact of tariffs and tensions in the Middle East.
Source: Ambito
