According to preliminary official estimates, US retail sales dropped again in April, although the pace of decline was slower than at the end of the first quarter (-0.4% compared to -1.3% in March). The fall in sales of gasoline, electronic goods and food was particularly pronounced. The core components relevant for estimating goods consumption, i.e. sales adjusted for motor vehicles and parts and for building materials, also slipped once again by around 0.6%. However, the decline was only half as much as in the previous month. But with gasoline prices expected to fall noticeably again, a further drop in goods prices is also on the cards in April. Thus, in price-adjusted terms the drop in goods consumption, which of late has accounted for around 42% of total real consumer spending, should therefore turn out lower. It will therefore hinge on services consumption whether private consumption again just falls short of the previous month's result in April.
USA: Retail sales disappointing
Overall, the backdrop for consumption is still difficult. Nonetheless, buoyed by tax cuts and higher transfer payments, disposable incomes are likely to rise appreciably this quarter (especially in May). We therefore consider a collapse in consumer spending in the second quarter as a whole unlikely.
Thomas Hofmann
e-mail: [email protected]