WASHINGTON (AFP) — US retail sales surged a stronger-than-expected 1.0 percent in May as Americans splurged out on gasoline, consumer goods and restaurant meals, government data showed Thursday.
Spending on gasoline has been stoked by a sharp spike in fuel costs, but the sales gains were spread across a variety of products and sectors, raising expectations that US economic growth is firing up.
"Recession? What recession?" asked Joel Naroff, the president of Naroff Economic Advisors.
"Yes, we bought a lot more gasoline as prices skyrocketed. More importantly, you name the good, electronics, appliances, clothing, health care, food or general merchandise and sales rose. We even ate out more. That is impressive, to say the least," Naroff said.
Core retail sales, which strip out vehicle sales, increased by 1.2 percent, the Commerce Department said in its monthly survey.
The report bolstered the position of some economists who believe the US economy will not slump into a recession this year. Total retail sales rang up 385.4 billion dollars during the month.
Other analysts believe a nagging housing downturn, a related credit squeeze and skyrocketing energy costs will pitch the world's largest economy into a downturn.
Although the headline number was buoyant, it also suggests that Americans' wallets are being stretched by rising gasoline costs which could crimp other spending.
The report's headline and core readings were stronger than expected. Most economists had predicted that retail sales rose 0.6 percent and that core sales increased 0.7 percent last month.
The gain in overall sales was the strongest since November.
The surge in sales comes as a 168-billion-dollar economic stimulus delivered tax rebates to millions of Americans. The administration of US President George W. Bush believes the stimulus will accelerate consumer spending, a vital motor of economic growth.
"The May retail sales report has dramatically changed the landscape," said Nigel Gault, an economist at Global Insight.
"It is impossible to know just how much of the sales improvement in May was due to the 50 billion dollars in stimulus payments that had been distributed by the end of the month. But the fact that March and April now look much more robust than before suggests that stimulus was not the only factor at work," Gault said.
Other economy-watchers said the tax rebate checks were paying a strong role in pumping up sales.
"The retail sales number was so strong today that one can only draw the conclusion that the vast majority, if not all, of the tax rebates are being spent," Merrill Lynch economist David Rosenberg said.
Breaking down the report, gasoline sales jumped 2.6 percent last month compared with April. Sales have boomed 13.8 percent compared with a year ago.
Building and garden equipment sales rose a robust 2.4 percent during the month while general merchandise stores saw sales increase 1.2 percent.
Americans are being buffeted by strong economic headwinds, but the Federal Reserve has slashed borrowing costs in a bid to boost economic momentum.
Although spending on many categories showed improvements last month, recent reports from big US automakers have been depressed. Demand for large sport utility vehicles has slumped sharply as gasoline costs have soared.
Average gasoline prices have struck 4.00 dollars a gallon in many areas across the United States.
The government survey also showed that Americans have lost none of their legendary appetite for eating out, as restaurant and bar sales increased 0.8 percent.
Clothing and clothing accessory sales improved 0.5 percent while electronics and appliance stores reported a 0.7 increase in turnover.
The government revised its readings for April retail sales to reflect a stronger picture, saying sales had risen 0.4 percent compared with an initial estimate that they had declined 0.2 percent.
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