Did all the Americans who swore they were going to pay down their debts with their economic stimulus windfall checks end up falling victim to the sirens of the mall? The Commerce Department reported on Thursday that retail sales jumped a vigorous 1 percent in May over April, double what economists were predicting, and more than double April's revised 0.4 percent growth.
A bar chart provided by the Wall Street Journal makes an argument that's pretty persuasive. Americans clearly changed their spending habits in May -- a month when the federal government cut at least $48 billion dollars worth of checks.
BusinessWeek's Michael Mandel, however, is not impressed:
You will forgive me a snort of disbelief. Something is simply not right here. Let me review the situation. The housing market is in free fall; household wealth is down; real wages are down; unemployment is up; gasoline prices are sky-high; food prices are high; and consumer confidence is shot.
And now you want me to believe that retail sales are all fine and dandy, and Americans don’t have any trouble spending on clothing, sporting goods, electronics, and basically everything else.
I’m sorry -- if it looks like a cow, sounds like a cow, and smells like a cow, it’s a cow, even if it comes with a notarized affidavit claiming to be a Porsche.
And Megan McArdle points to a Bloomberg story that notes that if you exclude purchases of gas, the rise in retail sales was only 0.8 percent.
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