Preview: Due June 17 - U.S. May Retail Sales - Consumers vulnerable to a pull back
We expect May retail sales to increase by 0.3% both overall and ex autos, but with a 0.1% decline ex autos and gasoline, which would suggest that consumers are starting to pull back as elevated gasoline prices increasingly weigh on real disposable income.
Gasoline prices increased further in May, even if May’s gain, like April’s, was less sharp than in March. While gasoline looks set to be a significant positive on prices, autos look unlikely to have much impact. Industry data shows only a marginal increase in sales, not fully erasing a modest decline in April.
Consumers look vulnerable to the impact of higher prices, with April’s savings ratio of 2.6% the lowest since June 2022, and down from 3.6% in February before the Middle East conflict started. Consumer credit saw two gains exceeding anything in the preceding twelve months in March and April, a sign that consumers have been spending beyond their means since the energy price spike.
The Chicago Fed’s CARTS survey looks for a 0.3% decline in May retail sales ex autos, even with the spike in gasoline prices, looking for a 1.3% decline in real terms. We doubt that underlying sales will plunge that sharply. May’s non-farm payroll showed aggregate hours worked in retail unchanged and employment resilient overall, but we expect sales ex auto and gasoline to see their first decline since September 2025.
