WASHINGTON — U.S. retail sales rose by the most in six months in May, a sign that confident consumers are leading a strong economic rebound after a slow start to the year.
Yet with high gas prices and inflation eating away at income gains made by workers, Americans may not be able to maintain this level of spending.
Retail sales jumped 0.8 percent last month, the Commerce Department said Thursday, the largest increase since November.
Excluding the volatile gas and auto categories, sales rose 0.8 percent. April’s sales growth was revised higher, from 0.2 percent to 0.4 percent.
Americans are highly confident about the economy, buoyed by steady job gains, an unemployment rate at an 18-year low, and the Trump administration’s tax cuts.
The solid job gains have meant more Americans are earning paychecks, and spending them.
Healthier consumer spending has boosted the economy after a sluggish first quarter.
Analysts forecast growth is likely to reach 4 percent in the April-June quarter, up from 2.2 percent in the first three months of the year.
“The consumer is on fire,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “The combination of lower taxes and a drum-tight labor market are producing very solid growth in disposable income.”
Sales at home and garden stores jumped 2.4 percent, the most in eight months, and rose 2 percent at gas stations. Both partly reflect higher prices, particularly gas sales, though home and garden stores are likely seeing higher prices for lumber and other building materials, partly because of strong demand for new housing.
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