Strong consumer demand and record gasoline prices pushed US retail sales higher in May and propelled the US trade deficit to a new record in April, a pair of government reports said on Monday.
Retail sales rose a greater-than-expected 1.2 percent in May to a seasonally adjusted $335.8 billion, the Commerce Department said. Gasoline sales increased 4.0 percent, the biggest gain since February 2003. Gasoline prices hit a record weekly high in the United States in late May.
Sales of autos and auto parts increased 2.7 percent, while sales of clothing, food, and health and personal care products also showed gains.
"Clearly the consumers are buying everything that isn't nailed down," said Chris Rupkey, senior financial economist at Bank of Tokyo Mitsubishi in New York. "They're buying both imports and at specialty (stores) and autos as well."
A second Commerce Department report showed the US trade deficit widened unexpectedly in April to a record $48.3 billion, as strong consumer demand and the highest oil prices in 21 years pushed imports to a record $142.3 billion. At the same time, exports tumbled slightly from March.
"It looks like our appetite for imports continues to outweigh our ability to export," said Gary Thayer, chief economist at A.G. Edwards and Sons in St. Louis. "We are expecting at some point that the weaker dollar will help the trade deficit to narrow, but we haven't seen that yet."
Mark Zandi, chief economist at Economy.Com in West Chester, Pennsylvania, said the positive impact on the economy from the boost in retail sales would more than offset the drag caused by the growing trade gap.
"Consumers are spending more aggressively, and despite the wider trade gap, economic growth (for the second quarter) will still come in at 5 percent," he said.
The US goods trade deficit with China jumped nearly 15 percent in April to $12.0 billion. The politically charged trade gap with China is expected to set another record in 2004, after reaching $124 billion last year.
The overall US trade gap is also on track to break last year's record of $496.5 billion.
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