Retail Sales in May

The Census Bureau reported retail sales for May here in the U.S. fell by 0.2%, mostly on the back of lower gasoline prices.  Paying less at the pump can’t be all bad I would think, especially given that last month we relayed to you the Bureau’s estimate showing April’s sales were up 0.1%, which we saw as soft but still positive.  What statisticians give, they can take away, and the April sales number was revised to a negative 0.2% drop.

The Bureau uses an alternative “core” figure which subtracts out volatile gasoline prices and big-ticket automobile sales, both of which can readily skew the monthly data.  Unfortunately, that didn’t help as core retail sales fell 0.1% in May on the heels of a 0.1% April decline.  The latter was also revised downward from the original 0.1% boost reported last month.

What should we make of this sudden shift from a slow but steady course to one where choppy seas suddenly bring on some swells?  Perhaps we are seeing the first signs of a general economic slowdown once more beginning to surface, one which could gain momentum much like what we saw in the past two summers.  On the other hand, this could just be the pay back we warned about in blogs past for the robust numbers seen in the early months of this year as unseasonably warm weather brought shoppers out early.  While it is still too premature to tell, the answer to this question will influence the Federal Reserve’s decisions going forward, and its importance will keep a measure of our attention.