Retail sales rose in April by 0.9%, the Commerce Department reported today. Sales rose in nine of 13 retail categories, including for discretionary items such as apparel, electronics, and furniture.
Further buttressing the case for continued consumer spending strength, Walmart (WMT) reported stronger than expected same store sales for the first quarter with an increase of 5.6% (or 3% excluding fuel.) Revenue came in at $141.57 billion for the quarter, above Wall Street projections of $138.8 billion. Walmart shares are down today, however, since higher costs pushed Walmart earnings lower to $1.30 a share, below Wall Street projections of $1.48 a share.
As of 1 p.m. today, May 17, the Standard & Poor’s 500 was up 1.54% and the Dow Jones Industrial Average had gained 101%. The NASDAQ Com polite was higher by 1.94% and the NASDAQ 100 was ahead 1.79%. The small cap Russell 2000, always very sensitive to trends in the economic news, was up 2.53%.
The gain in retail sales for April isn’t as strong as it seems. The figures are not corrected for inflation, recently running at 8.3% for the month.
Walmart’s report also pointed to signs of worsening stress on lower-income consumers. The retailer’s grocery sales showed consumers switching to cheaper private-label brands in the grocery category.
And Goldman Sachs chief economist Jan Hatzius reported that credit card balances are climbing and withdrawals from home equity lines of credit have picked up. Consumers’ reliance on leverage “supports spending in the short term but ultimately is not going to be a sustainable source of big increases in spending,” Hatzius told Bloomberg. “So it builds in a slowdown, sort of down the road.”