April was the tenth straight monthly increase and resilience to lofty food and gasoline prices. “The rise in retail sales was basically related to higher gasoline prices. Overall the report was good because it was positive, but the economy and consumers are still having trouble,” said Eugenio Aleman, a senior economist at Wells Fargo Securities. The retail data implied consumer spending got off to slow start in the second quarter as household budgets remained stretched by high food and energy prices.
The recent drop in gasoline futures pointed to a drop in prices at the gas pump. This may ease the strain on consumers. The Wednesday United States gasoline futures on suffered the biggest daily drop since September 2008. The June contract settled at $3.1228 a gallon, losing 25.69 cents. The receipts at gas stations rose 2.7 percent after rising 4.1 percent the prior month. Gas accounted for about 10.5 percent of overall retail sales in April. According to the Energy Information Administration, gas prices rose 24 cents to $3.85 a gallon in April from March.
A Commerce Department report showed strong increases in business sales and inventories in March. Sales grew 2.2 percent and inventories were up 1.0 percent. The rise in inventories also implied first quarter gross domestic product growth could be raised from the 1.8 percent annual pace reported that was by the government last month. Paul Dales, a senior U.S. economist at Capital Economics in Toronto said,”Perhaps the big concern is that spending appears to have lost a lot of momentum at the start of the second quarter.”