A new report from the United States Department of Commerce indicates that American consumers spent less at gas stations, department stores, and electronics retailers in May. The numbers show that retail sales—in these regions, specifically—showed their biggest drop in 16 months. This, of course, is not necessarily a good sign for the US economy.
On Wednesday, the Commerce Department said that retail sales fell 0.3 percent. This is the first decline, of any kind, since February and the sharpest decline since a 1 percent fall in January of last year. Unfortunately, economists had been expecting May sale to increase, slightly after a 0.4 jump in April only to find, of course, numbers going in the opposite direction.
It is important to note, however, that retail sales have risen furtively by 3.8 percent over the last year.
This is, a collective, cumulative number, of course. For example, sales at electronics retailers fell 2.8 percent last month, which is the biggest drop in this sector since March of 2016. Similarly, sales at gas stations fell by 2.4 percent last month, with department stores also down by 1 percent as they struggle to compete with the growing strength of online retailers.
Now, economists had said they expected consumer spending to pick up in spring and summer, following a slow beginning to 2017. Obviously, the growth has been a little stagnant; an uninteresting 1.2 percent annual pace from January through March is the type of slump that could make things more difficult as the year progresses.
After all, consumer spending accounts for approximately 70 percent of economic activity in the United States.
With all that in mind, the Trump administration has said it has a plan to accelerate economic growth by roughly 2 percent, this year, just by cutting taxes, loosening some regulations, and investing more into infrastructure (like roads and bridges).
Of course, President Trump’s promises come in the midst of great turmoil as he—and his administration—continue to frustrate an American public with growing skepticism. And because of all of this, economists get more and more skeptical that he will ever be able to overcome more long-term problems—like an aging workforce and worker productivity slowdown—that the administration may not be addressing at the moment.