The news: US retail sales fell month-over-month (MoM) in May for the first time in five months thanks in large part to a rapid decline in purchases of vehicles and other big-ticket items, per the US Commerce Department.
Digging into the numbers: Consumer spending has significantly shifted away from big-ticket items from January to May of this year.
What’s happening? The Commerce data and broader trend lines suggest that US consumers’ appetite for goods is softening as some feel the pinch of rising prices and interest rates, while others shift their spending to services such as eating out, travel, and entertainment.
Across the globe: A challenging retail picture isn’t unique to the US.
Looking ahead: US retail sales (excluding auto) are expected to jump 7.5% YoY during the critical mid-July to Labor Day back-to-school period, per a forecast by Mastercard SpendingPulse.
The big takeaway: While US consumers have been incredibly resilient throughout the pandemic, they’re starting to feel the impact of prolonged inflation as food and gas prices eat up more of their income.
Go further: For more on The Era of Uncertainty, read our report here.