Springtime buying: More furniture, less dining out

Inflation is surging. American consumers appear to keep spending anyway.

Driving the news: Retail sales rose 0.9% in May, the Commerce Department said this morning.

• The data is not adjusted for inflation, so stronger spending is a function of higher prices, at least in part. For instance, spending at gasoline stations gained 3.4% last month alone, following a 2.4% jump in April.
• Spending increased across most major retail categories, including furniture stores and e-commerce. Consumers pulled back on electronics shops and dining out.
• The control group — which excludes volatile categories like gasoline, autos and building materials — rose by a stronger-than-expected 0.7%. That narrower measure will feed into the consumer spending calculations for second-quarter GDP.

Between the lines: A robust tax refund season has helped consumer spending, along with support from stronger job gains and stock market-related wealth gains for higher-income households.

What they're saying: "Consumption regained some momentum over the spring, but the sugar rush from bigger-than-usual tax refunds will wear off soon," Samuel Tombs, chief U.S. economist at Pantheon Macro, wrote in a client note.

• Tombs estimated that households' real spending — that is, adjusted for inflation — increased 0.3% last month, including broader services expenditures that are not captured in the report.

The bottom line: "There does not appear to be any consumer demand destruction from higher gas prices during the first three months of the war," Brean Capital's John Ryding wrote this morning.