US retail sales suggest resilience in the face of cost pressures in World Economy News 15/05/2026 Inflation data has been the main focus so far this week, but today it is retail sales. Consumer spending accounts for around 70% of all economic activity in the US and retail sales are responsible for a little over 40% of consumer spending. As such, this report is an important barometer of how the Middle East situation is impacting the real economy. Retail sales rose 0.5% month-on-month in April, which was broadly as expected, but the details show big swings in key components. It is important to remember that these are nominal dollar figures with higher prices lifting gasoline station sales by 2.8% MoM. There were also decent monthly gains of 1.4% for both sporting goods and electronics. However, auto sales dropped 0.4%, furniture sales fell 2% and clothing dropped 1.5% MoM. Non-store retailers continue to post decent gains of 1.1%. It is a mixed outcome, but so far there is little sign that higher fuel costs are forcing consumers to cut back spending on other things, despite consumer confidence supposedly being at all-time lows. Nonetheless, we expect that pressure to build. But the pressures will build, even if a Middle East deal is struck Even if we get a deal that allows a reopening of the Strait of Hormuz soon, we suspect energy prices will remain elevated throughout 2026. On the demand side, inventory rebuilding in Europe and Asia will keep a strong bid in the market, while on the supply side we still don’t really know the scale of damage to infrastructure. Then we must consider the willingness of ship and tanker owners to send their vessels back to the region, given legitimate concerns about the resilience of any peace. In an environment of weak jobs and wage growth, high energy costs will continue to eat away at spending power and this runs the risk of softer retail and consumer spending growth numbers in the second half of the year. In terms of other data relea