U.S. retail sales increased for a second straight month in April, indicating consumer spending is accelerating after a sluggish first quarter.
The Commerce Department reported Tuesday that retail sales climbed 0.3% last month following an upwardly revised 0.8% surge in March. The April gain matched economists’ forecasts.
“Americans have increased spending in the past two months, helped out by a recent cut in taxes, annual tax refunds and the best jobs market in at least two decades,” MarketWatch said. “They aren’t spending like crazy, but they are spending enough to keep the U.S. economy growing at a solid pace.”
The pickup in spending could result in a stronger reading in gross domestic product in the second quarter. The economy expanded at a 2.3% rate in the first quarter.
“While lower income taxes could also provide a boost, rising gasoline prices could blunt some of the stimulus,” MarketWatch added.
Prices at the pump have increased about 31 cents to near $3.00 per gallon since January, according to data from the U.S. Energy Information Administration.
In April, receipts at service stations jumped 0.8%, reflecting the higher gasoline prices, following a 0.3% gain in March. Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.4% last month after increasing 0.5% in March.
“These are solid figures, particularly given the upward revision to March, which supports our forecast that consumer spending is accelerating again in the second quarter after a sluggish first quarter,” said Andrew Grantham of CIBC Economics.
Economists estimate that consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 2.5% annualized rate early in the second quarter. It increased at a 1.1% pace in the January-March quarter, which was the slowest in nearly five years.
Clothing stores posted the biggest increase in sales in April as Americans bought the latest fashions or got new outfits for the warm weather.
“Looking ahead, the consumer now faces the added burden of higher gasoline prices,” Michael Feroli, an economist at JPMorgan in New York, told Reuters.