On The Money

Commerce Department Reports Weaker U.S. Retail Sales In May

Hazy View of a Shopping Mall

Retail sales and prices for consumer goods in the U.S. dropped in May, reflecting a weaker demand and cautious sentiment, according to the Commerce Department.

Despite the decline, sales training tutorials and seminars may continue to be relevant in the industry due to a strong employment market and better finances. These two factors play important roles in buoying consumer spending, which is responsible for 70% of the U.S. economy.

Cost of Living

A 0.1% drop in the Labor Department’s Consumer Price Index (CPI) in May indicated a cheaper cost of living in the U.S., driven by falling prices for gasoline, clothes, plane tickets, and cars among others. The CPI’s decline has occurred for the second month in a row, following a 0.2% decrease in April.

However, the CPI rose 1.9% in May year over year. The decline also provided some good news for those with debt or seeking to borrow bank loans. Weaker consumer prices might restrict the Federal Reserve in pursuing higher interest rates for 2017.

Still, some economists expect that a continually weak inflation would put monetary tightening at risk.

Broader Declines

Despite a 3.8% year-over-year increase in May’s retail sales, some sectors still recorded significant declines in business. Department stores, for instance, recorded the biggest decrease in purchases at 1% since July 2016, while sales of electronics and appliances dropped by 2.8%, the most since March 2010.

Car dealers sold fewer vehicles in May as well, as they registered a 0.2% drop after posting a 0.5% increase in April. Retail sales excluding automobiles also dropped 0.3% following a 0.4% growth.

The weaker consumer prices in May could be a bane for retail businesses, although the figures represented a silver lining for the ordinary person. It simply meant that the cost of living in the U.S. became more affordable in the meantime.