If you’ve been on a shopping spree recently, you have lots of company. Government figures show that retail sales in May were up by 5.9 percent over the same month last year. That’s a 0.8 percent increase for this year.
Americans are flocking to clothing stores, restaurants and home-improvement stores at a higher rate, the economists report. The increase at “physical stores” outpaced that in “nonstore retailers” such as Amazon, the figures show.
A strong economy and a booming job market, with unemployment at its lowest rate since 2000, are credited with the surge in spending. Tax cuts enacted last year also put some discretionary money into many purses. Spenders watched to see what would happen with taxes and the cuts were an all-clear signal for a shopping bonanza.
At the beginning of this year, economists predicted a 3 percent expansion of the economy. Now they are looking at 3.5 percent.
But, it is not likely that the spending spree will go on indefinitely.
Savings have suffered as the household money went into purchasing. The rate dipped to 2.8 percent in April, one of only three times since the 2008 recession that the figure has been below 3 percent.
Responding to the current spending climate, the Federal Reserve has upped the prime interest rate, and is expected to make additional increases this year. Another factor that could cool the heated economy is the tariff wars going on between the United States and other countries. Combined these market effects could put an end to big spending.
Auto sales are expected to jump sharply if the Trump Administration carries through with threats to put tariffs on cars from Europe and Japan. That would put a damper on car sales, which have shown a 4 percent increase over a year ago. Gas prices also are a factor, with a 17.7 percent increase in gas prices over last year. Fewer car sales and higher gas prices may be the deciding factors for people anticipating a car purchase.