Just when it appeared as though all of the economic news was supportive once again, following the long and arduous winter, comes word, issued a bit earlier this morning, that retail sales had slowed materially in April. In fact, the gains in that key category all but evaporated.

To wit, data released by the Commerce Department indicated that such spending, which had shown a formidable and upwardly revised increase of 1.5% in March, slowed to a crawl last month, gaining just a token 0.1%. Still, this was the third monthly gain in succession, with the increases in February and March being much stronger. Of note, the initial estimated gain for March had been 1.1%. There had been a sizable decline in such activity during January, as heavy winter storms blanketed much of the nation.

As to this report, there was a modest rise in car sales last month. Thus, if we exclude the auto component, to get the so-called core rate of retail spending, we learn that there was no change in outlays in April. Expectations had been for a rise of 0.6% in core retail activity last month.

Moreover, if we exclude not only auto sales, but also gasoline spending and sales of building materials, we find that spending was down by 0.2% in April, suggesting that there had been notable weakness in such activity last month.

Meanwhile, retail sales account for about one-third of consumer spending, the main component of U.S. economic activity. All told, such expenditures comprise two-thirds, or more, of aggregate gross domestic product. In the past 12 months, retail spending has risen by about 4%, a credible increase.

As to some individual components in this survey, we learned that spending on motor vehicles and parts rose by 0.6% last month, but that spending on furniture and home furnishings declined 0.6%. At the same time, we saw sales at electronics and appliance outlets drop by a material 2.3%, while sales at health and personal care stores climbed by 0.6%. Thus, it was a mixed pattern, which is obvious by the limited overall monthly change.

Looked at in its entirety, this was clearly a disappointing report, but one which probably does not alter the second-quarter GDP outlook, where we still estimate that an increase of some 3% will be tallied.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.