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U.S. Retail Sales Kept Up Strong Growth in April, Keeping Fed Rate Hikes on Track

Economic Indicators May 17, 2022 08:42AM ET
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© Reuters.

By Geoffrey Smith

Investing.com -- The U.S. consumer kept spending in April, shrugging off concerns that high inflation and the looming prospect of an economic slowdown might act as a brake.

Retail sales grew 0.9% from March, and March's data were revised up to show a gain of 1.4% from February, double the 0.7% initially reported. That left the annual rate of retail sales growth at a robust 8.2% - although that boils down to something close to stagnation when inflation of 8.3% is taken into account.

The increase wasn't all down to rising prices for groceries and gasoline. Excluding food and energy costs, core retail sales grew 0.6%, more than the 0.4% predicted. Here, too, March sales were revised up to a gain of 2.1% from an initial 1.4%.

Financial markets took the data as a sign that the Federal Reserve will persevere with a string of hefty interest rate hikes over the course of the next few months. The yield on the interest-rate sensitive 2-year Treasury note rose 8 basis points to 2.64%, while the benchmark 10-Year yield rose 6 basis points to 2.94%.

S&P 500 futures, meanwhile, edged down 3 points but were still posting solid gains of over 1% for the overnight session.

"Another very strong retail sales report," said Peterson Institute senior fellow Jason Furman, via Twitter. "Good news for GDP and recession prospects. Bad news for a normalization of the economy (with) slowing inflation." 

As in previous months, the data showed strong evidence of consumers taking advantage of the reopening of the economy after two years of intermittent lockdowns. Spending in bars and restaurants rose 2.0% on the month, twice as strong as the overall rise, and was up 19.8% on the year.

The figures might have been even stronger had it not been for a dip in sales at gas stations, as prices briefly came off their March highs. Excluding gas stations, sales rose 1.3% on the month. Sales at gas stations are still up over 36% on the year, a stark illustration of how Americans are having to dedicate more of their available income to fuel costs.

The release was consistent with company-level data from Walmart (NYSE:WMT) earlier in the day. The U.S.'s biggest retailer had likewise suggested that inflation would generate higher nominal sales this year. However, it had to revise down its profit guidance for the year due to rising input costs.

U.S. Retail Sales Kept Up Strong Growth in April, Keeping Fed Rate Hikes on Track
 

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Comments (15)
May 17, 2022 12:45PM ET
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hi everyone only 13 dayes offer world 🌎 no direkson. no dayrekson go from 💯 dobbel 💯 person right this months last
Gary Smith
Gary Smith May 17, 2022 10:27AM ET
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Fed hikes were never "off track". Another headline to crash the market.
Jack Jack
Jack Jack May 17, 2022 9:56AM ET
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Sufian Saadoun.
Jack Jack
Jack Jack May 17, 2022 9:56AM ET
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1234567
Wilks Campbell
Wilks Campbell May 17, 2022 9:28AM ET
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Inflation in April is 8.3%, simply this inflation can cause a surge in retail sales, dont think this retail sales is of any meaning,,,,!
Baer Markit
Baer Markit May 17, 2022 9:16AM ET
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core inflation grew .4% retail sales grew .6%. this isn't hard to understand. our economy is very strong.. the consumer is unaffected by inflation, and we could use a little slowing.
Robert Cox
Robert Cox May 17, 2022 9:16AM ET
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April is the month people in the US begin to receive tax refunds from the government. So they spent those refunds... probably on travel to Canada to buy baby formula. Take the nonsense somewhere else.
Wilks Campbell
Wilks Campbell May 17, 2022 9:15AM ET
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you are right! by the way, people spend more ahead of sustained inflation is a result of inflation scare, it is just confirm Fed to keep on hawkish? Dont see it as a good news. Dont tell me this strong spending cam shrug off recession scare! People not that nut head !
Ron Te
Ron Te May 17, 2022 9:13AM ET
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Economy is strong. It is not going to go into recession. Hikes are needed to bring down demand. We have to see how that fares. Hope earning are up, housing down, prices down. That also means market may be down Or mixed.
Jan Buyle
Jan Buyle May 17, 2022 9:10AM ET
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if sales growt is up 8 2% and inflation yoy is 8.5%, can one call it growt?
Baer Markit
Baer Markit May 17, 2022 9:10AM ET
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core inflation did not grow 8.5%
Jim Reisz
Jim Reisz May 17, 2022 9:08AM ET
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So real retail sales growth over the past year is 0.1%.
Jim Reisz
Jim Reisz May 17, 2022 9:08AM ET
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So real retail sales growth over the past year is 0.1%.
 
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