Quantcast

Americans are spending like mad again - KOAM TV 7

Americans are spending like mad again

Updated:

14 JUN 18 13:08 ET

    (CNN Money) -- Americans are spending. A lot. And not just on Amazon.

Retail sales rose 0.8% in May, the government reported Thursday — much better than expected. Spending was up 5.9% from a year ago.

And the gains were broad: Spending surged at clothing stores, at restaurants and at home-improvement stores such as Home Depot and Lowe's.

In fact, the jump in spending at physical stores in May outpaced what the government calls nonstore retailers, a category that includes Amazon and other online retailers. (It also includes catalog retailers, vending machines and even newspaper delivery. How quaint!)

American shoppers are feeling more confident because of a strong economy and job market. The unemployment rate is the lowest since 2000. And most people have some extra money from the tax cuts enacted late last year.

Retail sales have been improving after a tough start to the year.

A harsh winter may have been partly to blame for weak spending in January and February. Economists also speculated that Americans were waiting to see what would happen with tax laws. Once the tax cuts passed, it was an all-clear to start shopping.

All that spending should boost economic growth.

Related: Maker of Jack Daniel's worried about impact of trade war

Economists at Barclays raised their forecast Thursday in light of the strong retail sales figures. They now think the economy will expand at an annual rate of 3.5% in 2018, up from their earlier estimate of 3%.

Americans may not be able to keep spending at this pace indefinitely.

The savings rate dipped to 2.8% in April as the rate of consumer spending outpaced the increase in personal income.

The savings rate has only been below 3% three times since the 2008 financial crisis. It was also lower than 3% last November and December, but it rebounded after the holiday shopping season.

So shoppers may be close to tapped out, and may have to start saving more and spending less — especially because the Federal Reserve is expected to keep raising interest rates this year and next year.

Tony Bedikian, head of global markets at Citizens Bank, said rate hikes are a risk but that shoppers may not pull back "as long as the Fed doesn't raise rates too quickly." Bedikian argues that people will keep spending "as long as they have jobs and wages are rising."

Bedikian says the biggest risk to spending is the threat of more tariffs and escalating trade disputes with China, Canada, Mexico and Europe.

Related: Made in America -- the German cars Trump doesn't want

Other analysts say additional US tariffs on imported goods could hurt spending as well. That's why Paul Ashworth, chief US economist with Capital Economics, said in a report that the tax cuts will "provide only a temporary boost" to spending.

Ashworth worries that consumer spending will slow, particularly for cars and trucks, because of the Trump administration's threatened tariffs on cars from Europe and Japan.

Auto sales are still rising, up 4% from a year ago despite a big surge in the price of gas. In fact, sales at gas stations rose 2% from April to May alone because of higher prices. Gas station sales are up 17.7% from a year ago.

But the potential for even higher prices at the pump, coupled with a slowdown in auto sales, could be a one-two punch that hurts consumer spending for the next few months.

The-CNN-Wire
™ & © 2018 Cable News Network, Inc., a Time Warner Company. All rights reserved.

  • NewsMore>>

  • Joplin Man Sentenced for Arson, Set Apartment Fire

    Joplin Man Sentenced for Arson, Set Apartment Fire

    Friday, October 19 2018 5:34 PM EDT2018-10-19 21:34:02 GMT
    Apartment fire in Joplin, MO in May 2018Apartment fire in Joplin, MO in May 2018
    Apartment fire in Joplin, MO in May 2018Apartment fire in Joplin, MO in May 2018
    Brian Barksdale is sentenced for first degree arson for setting fire to his Joplin apartment on South St. Louis. On May 23rd, 2018, Joplin emergency crews responded to the Cardinal Apartments at 1015 South St. Louis for a structure fire. Firefighters arrived on scene shortly before 10:00 p.m. and found a two-story wood frame multi-residential structure with heavy fire coming from an apartment on the first floor. Crews extinguished the fire by 10:30 p.m. When officers arrived on ...More >>
    Brian Barksdale is sentenced for first degree arson for setting fire to his Joplin apartment on South St. Louis. On May 23rd, 2018, Joplin emergency crews responded to the Cardinal Apartments at 1015 South St. Louis for a structure fire. Firefighters arrived on scene shortly before 10:00 p.m. and found a two-story wood frame multi-residential structure with heavy fire coming from an apartment on the first floor. Crews extinguished the fire by 10:30 p.m. When officers arrived on ...More >>
  • Former Southeast Kansas Principal Convicted of Sex Offense

    Former Southeast Kansas Principal Convicted of Sex Offense

    Friday, October 19 2018 12:20 PM EDT2018-10-19 16:20:10 GMT
    Ray Alfred GoldenRay Alfred Golden
    Ray Alfred GoldenRay Alfred Golden
    A former Columbus elementary principal is found guilty of attempted indecent solicitation of a child. Baxter Springs resident Ray Alfred Golden is accused of trying to persuade a child to enter his home with the intent to commit an unlawful sexual act upon the child in the home. The alleged incident happened in August 2015. On October 18th, 2018, Golden entered a plea of guilty in lieu of proceeding to trial. Cherokee County Attorney Jacob Conard says the 81-year-old maintained ...More >>
    A former Columbus elementary principal is found guilty of attempted indecent solicitation of a child. Baxter Springs resident Ray Alfred Golden is accused of trying to persuade a child to enter his home with the intent to commit an unlawful sexual act upon the child in the home. The alleged incident happened in August 2015. On October 18th, 2018, Golden entered a plea of guilty in lieu of proceeding to trial. Cherokee County Attorney Jacob Conard says the 81-year-old maintained ...More >>
  • KOAM MORNING NEWS TO KNOW 10-19

    KOAM MORNING NEWS TO KNOW 10-19

    Friday, October 19 2018 8:47 AM EDT2018-10-19 12:47:25 GMT

    While the long anticipated Block 22 lofts opened for students, the restaurants that were supposed to open by now, haven't been started.  Plus all the news you need to know before you walk out the door.

    More >>

    While the long anticipated Block 22 lofts opened for students, the restaurants that were supposed to open by now, haven't been started.  Plus all the news you need to know before you walk out the door.

    More >>
Powered by Frankly

KOAM - Licensed to Pittsburg, Kansas
Send tips, ideas and press releases to: tips@koamtv.com
Send newsroom questions or comments to: comments@koamtv.com
Phone: (417) 624-0233 or (620) 231-0400
Web comments or questions: webmaster@koamtv.com
Newsroom Fax: (417) 624-3158

Powered by Frankly, Inc. All content © Copyright 2000 - 2018 KOAM. All Rights Reserved. For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices.