U.S. Retail Sales Disappoint in May; Post-Tariff Rush Fades

U.S. retail sales rose just 0.1% in May, lower than expected and the weakest growth in four months. The slowdown is mainly due to the fading of pre-tariff panic buying that had boosted sales earlier.

Key Points:

• Core retail sales (excluding cars, fuel, and food) fell 0.6%.
• Sectors with notable declines: furniture (-3.5%), construction materials (-2.7%), electronics (-1.4%), and home goods (-0.6%).
• Slight gains were seen in auto sales (+0.9%) and general merchandise (+2.9%).

Broader Economic Impact:

• The data raises concerns about consumer confidence and U.S. GDP growth in Q2.
• The Atlanta Fed estimates Q2 GDP at 1.6%, lower than earlier expectations.
• Japan’s Nomura projects U.S. annual GDP growth at just 0.3% in early 2025, indicating a risk of economic stagnation.

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