U.S. consumers spent 0.3 percent more on retail purchases in May than in April, the U.S. commerce department reported, besting economists’ expectations of a 0.2-percent decline.
The number of dollars spent rose both online and in brick-and-mortar businesses.
The labor market remains healthy, having added 1.6 million jobs through May. Also, the U.S. manufacturing economy continued to grow last month, adding to April’s increase.
Consumers’ insistence on spending may complicate the U.S. Federal Reserve’s effort to slow the economy by raising interest rates.
However, the Fed paused its campaign of rate increases last week.
The government’s new trillion-dollar round of borrowing to pay current bills and banks’ tighter lending strictures are likely to have the same effect as a rate hike, analysts said, giving the Fed room to pause and take stock of the economy’s performance.
Fed officials have made it clear that the central bank is likely to raise its rates at least once and probably twice more this year, perhaps as soon as next month.
“The recession will be delayed as long as consumers continue to spend,” economist Oren Klachkin at Oxford Economics wrote in a note last week.
TRENDPOST: However, inflation in May ran at 4.0 percent, meaning that, once again, shoppers are spending more dollars to buy less stuff.
Also, the dollar amount of spending measures largely goods that people bought; spending on services such as health care, restaurant meals, and yoga lessons is not included in the figure.