News & Events

Economic Advisor: June 20, 2018
June 20, 2018


Retail sales surged, accompanied by continued consumer prices gains, while layoffs fell.

Retail Sales

Retail sales enjoyed their biggest monthly gain in six months, growing 0.8 percent in May to hit $502 billion, the Census Bureau reported last week. Compared to the same period last year, this was 5.9 percent higher than May 2017.

Key growth sectors included miscellaneous retailers, which grew 2.7 percent; building materials and garden supplies, which increased 2.4 percent for the month; gasoline stations, which increased 2 percent; department stores, which expanded 1.5 percent; and clothing and accessories stores, which gained 1.3 percent.

Given that consumer spending drives 70 percent of U.S. economic activity, May’s surge came as good news to economists.

“The consumer is on fire,” Amherst Pierpont Securities Chief Economist Stephen Stanley told the New York Times. “The combination of lower taxes and a drum-tight labor market are producing very solid growth in disposable income.”

Consumer Prices

The Consumer Price Index grew 0.2 percent in May, continuing its 0.2 percent increase in April, according to last week’s report from the Bureau of Labor Statistics. Compared to last year, the index grew 2.8 percent from May 2017.

The key drivers for May’s gains included gasoline prices, which grew 1.7 percent to offset a decline in fuel oil prices, and a marginal 0.1 percent gain in electricity prices. A 1.3 percent gain in medical prices and a 0.3 percent increase in shelter prices also contributed to May’s CPI gain.

Core inflation — consumer prices minus the volatile food and energy categories — matched CPI growth for the month, increasing 0.2 percent for the month.

Initial Jobless Claims

First-time claims for unemployment benefits filed by the newly unemployed during the week ending June 9th fell to 218,000, a decline of 4,000 claims from the preceding week’s total of 222,000, the Employment and Training Administration reported last week. This was considerably lower than the 225,000 layoff claims that job market watchers had anticipated. 

Meanwhile, the four-week moving average — regarded as a more reliable measure of initial jobless claims — ticked down to 224,250, a drop of 1,250 claims from the prior week’s average of 225,500. Last week’s report also marked the 171st week in which initial claims were below the 300,000-claim level, which economists consider an indicator of a growing job market.

Notably, last week’s report marked the first report since hurricanes Harvey, Irma, and Maria in which the Administration didn’t note that the impacts of the storms continued to throw off layoffs reporting.

This week, we can expect:

  • Tuesday — Housing starts for May from the Census Bureau.
  • Wednesday — Existing home sales for May from the National Association of Realtors.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; leading economic indicators for May from the Conference Board.

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