U.S. retail sales dropped unexpectedly in May, as consumer spending shifted from the purchase of big-ticket goods to spending on dining out and other activities formerly restricted by the pandemic.
Consumers cut spending by 1.3% last month, trimming expenditures on autos, furniture, electronics, building materials and other big-ticket items, the Commerce Department reported Tuesday. Supply-chain disruptions and higher prices are crimping sales of long-lasting goods and consumers are not spending on these items as much as they were throughout the pandemic.
Receipts at auto dealerships fell 3.7%. Sales at electronics and appliance stores dropped 3.4%, and receipts at furniture stores fell 2.1%. Sales at building material stores dropped 5.9% and online retail sales slipped 0.8%.
However, sales at clothing stores rose 3% and consumers increased spending in restaurants and bars by 1.8% as more consumers are going out now that pandemic restrictions are easing. Sales at restaurants and bars are 70.6% higher compared to May 2020.
“The great pivot from goods into services has gained traction,” Diane Swonk, chief economist at Grant Thornton told The Wall Street Journal. “As we shift into seeing and being seen, that whole process means spending on things that we didn’t spend on during the pandemic.”