Consumers were supposed to be the casualty. Instead, they were the headline.
The Commerce Department reported on June 17 that retail sales rose 0.9% in May, easily beating the 0.5% gain economists had forecast and marking the fourth consecutive month that American shoppers outspent expectations. The increase came after a downwardly revised 0.4% rise in April, and pushed total retail and food services sales to $763.7 billion for the month — up 6.9% from a year earlier.
What makes the number remarkable isn't the size. It's the timing. May was a month in which gasoline prices remained well above $4 a gallon, a direct consequence of the U.S.-Iran conflict and its disruption to Middle East oil supply. It was also a month that ended with markets bracing for the debut press conference of Kevin Warsh, the new Federal Reserve chair, held the same afternoon the retail data landed. A decade ago, either of those events alone might have been enough to send consumers into a defensive crouch. This time, they kept shopping.
That gap between what the moment seemed to call for and what shoppers actually did is the real story.
