Retail sales face biggest drop in 16 months
WASHINGTON — Americans cut spending at gasoline stations, department stores and electronics shops in May as retail sales registered their biggest drop in 16 months, a cautionary sign for the economy.
The Commerce Department said Wednesday that retail sales dropped 0.3 percent, the first decline since February and the sharpest since a 1 percent decrease in January 2016. Economists had expected sales to increase slightly in May after rising 0.4 percent in April.
Over the past year, retail sales have risen a solid 3.8 percent.
Last month, sales fell 2.8 percent at electronics stores, the biggest such drop since March 2016. They fell 2.4 percent at gasoline stations and 1 percent at department stores, which have struggled with competition from online retailers.
Economists have said they think consumer spending, which accounts for about 70 percent of U.S. economic activity, will pick up in the spring and summer after a slow start to 2017. A slump in consumer spending early this year is a key reason why the economy expanded at only a lackluster 1.2 percent annual pace from January through March.
The Trump administration has said it can accelerate economic growth to 3 percent a year by cutting taxes, loosening regulations and pouring money into roads, bridges and other infrastructure projects.
But President Donald Trump’s agenda has been held up by political turmoil and a lack of details from the administration. And economists are skeptical that Trump could overcome longer-term problems that weigh on economic growth, including an aging workforce and a slowdown in worker productivity.