Synopsis:

Goldman Sachs projects a significant rebound in retail sales growth for May, with expectations of a +0.3% increase in headline retail sales and a +0.5% rise in core retail sales. This positive outlook is driven by a recovery in consumer spending following seasonal adjustments and increased credit card spending.

Key Points:

1. Previous Month's Performance:

   • Core retail sales fell in April after a strong rise in March.
   • The decline led to concerns about a potential slowdown in consumer spending.

2. Seasonal Adjustment Considerations:

   • The timing of Easter can make seasonal adjustments challenging, hence March and April's data are best viewed in combination.
   • Overall, Goldman Sachs maintains a solid outlook for consumer spending.

3. May Retail Sales Forecast:

   • A forecasted rebound in retail sales for May with a +0.3% increase in headline sales and a +0.5% rise in core sales.
   • The rebound is supported by an uptick in credit card spending at retailers.

4. Factors Influencing the Forecast:

   • Headline retail sales are expected to be softer than core sales due to lower gasoline prices, which are anticipated to offset higher auto sales.

Conclusion:

Goldman Sachs anticipates a positive turnaround in retail sales for May, driven by adjusted seasonal factors and increased consumer spending through credit cards. Despite a potential drag from lower gasoline prices, the overall outlook for consumer spending remains solid.