Retail sales in the USA maintained growth in the month impacted by Trump's tariffs, but there was a clear slowdown, which may raise questions about the intensity and stability of consumer spending in the coming months.
After Trump announced a shocking reciprocal tariff plan in early April, the latest data shows that retail sales in the USA still saw a slight increase that month, but the growth rate has noticeably slowed.
USA's retail sales month-on-month rate for April recorded 0.1%, slightly above market expectations of 0%, with the previous value revised from 1.4% to 1.5%. The USA's April PPI annual rate recorded 2.4%, lower than the expected 2.5% and the previous value of 2.7%, marking a decline for the third consecutive month, reaching the lowest level since September of last year; the April PPI month-on-month rate recorded -0.5%, the lowest since April 2020, far below market expectations of 0.2%, with the previous value at -0.4%. The number of initial jobless claims in the USA for the week ending May 10 rose slightly to 0.229 million, in line with expectations.
After the data was released, spot Gold rose nearly 4 dollars shortly, while the USD fell over 10 points in a short period.
Retail sales data is considered a key barometer of consumer spending patterns and sentiment; current data indicates that consumer attitudes are somewhat cautious. Consumer spending is a crucial driver of overall economic activity in the USA.
Although the slight increase in retail sales can be seen as Bullish Signals for economic growth, the fact that it is lower than last month's data raises questions about the strength and stability of consumer spending in the coming months. Policymakers and investors will closely monitor this data when assessing the economic situation.
Ten minutes after the data was released, Federal Reserve Chairman Powell took the stage to deliver the opening remarks at the second Fed Thomas Laubach Research Conference. This was his first public statement since the FOMC policy meeting last week, where interest rates were kept unchanged (a hold decision for the third consecutive time).
Powell stated that officials agreed on the need to reconsider the strategic wording around underemployment and average inflation rates. He expects April's PCE to be around 2.2% and did not comment on the outlook or MMF policy.
Powell's speech focused on matters with more far-reaching implications: the Federal Reserve is adjusting its overall policy-making framework to respond to significant changes in the inflation and interest rate outlook following the pandemic in 2020. He stated, "Since 2020, the economic environment has changed significantly, and our assessments will reflect our evaluations of these changes."
The Federal Reserve adopted the current framework five years ago and began evaluating it this year. The assessment is unlikely to affect the way the Federal Reserve currently sets interest rates. Powell previously stated that the Federal Reserve may complete this process and announce the results before August or September.
Powell stated that the inflation-adjusted "real" interest rates have risen following the 2020 pandemic, which could impact factors in the Federal Reserve's current framework. He said, "Higher real interest rates may reflect the possibility that inflation could be more unstable in the future than during the crisis period of the 2010s. We may be entering a period of more frequent and potentially more persistent supply shocks—this poses a significant challenge for both the economy and central banks."
He said, "Stabilizing inflation expectations is crucial to everything we do. In the face of significant shocks, uncertainty about the outlook must be conveyed. It is appropriate to reconsider the average inflation target."
Editor/jayden
