Consumers Spending, Buyers Moving, Inflation Expectations Easing — Evening Brief – 06.17.26

U.S. consumers opened their wallets in May, homebuyers returned to the market, and business inflation expectations continued their gradual retreat.

Retail sales climbed 0.9% month over month to $763.7 billion in May, topping economists’ expectations for a 0.5% increase and accelerating from April’s revised 0.4% gain, according to data released Wednesday by the U.S. Census Bureau. On a year-over-year basis, retail sales rose 6.9%, up from 4.9% in April.

Core retail sales, which exclude motor vehicles and parts, increased 0.8%, while sales excluding gasoline and autos rose 0.5%.

The strongest gains came from online shopping, with nonstore retailers posting a 12.2% annual increase. Sales at sporting goods, hobby, musical instrument and book stores rose 11.3%, while miscellaneous retailers gained 9.1%. Gasoline station sales surged 26.5% from a year earlier, reflecting higher oil prices linked to the conflict involving Iran.

Furniture and home furnishings stores were the lone category to post a decline, falling 1.2% year over year.

Housing data also surprised to the upside. Pending home sales rose 3.8% in May, far exceeding the 0.9% consensus estimate and improving from April’s revised 0.3% increase, according to the National Association of Realtors.

“A late spring buyer rush — even with mortgage rates not budging — is an indication of pent-up housing demand and consumers’ acceptance of above-6% mortgage rates as the new normal,” said Lawrence Yun, NAR’s chief economist.

Meanwhile, year-ahead business inflation expectations eased to 2.3% in June from 2.4% in May, according to the Federal Reserve Bank of Atlanta, while long-run inflation expectations held steady at 2.8%.