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Consumers Shift Spending to Services

Retail sales dropped 1.3% in May, following a 0.9% gain in April, reported the U.S. Department of Commerce.

June 18, 2021
Consumers Shift Spending to Services

Consumers cut spending by 1.3% in May.

1 min to read


It appears the buying spree spurred by federal stimulus checks is ending as consumers shift their spending to services as the economy reopens. 

Retail sales dropped 1.3% in May, following a 0.9% gain in April, reported the U.S. Department of Commerce. The drop is higher than the 0.8% decrease predicted by economists. 

Consumers are spending more on services. One big winner in this category is restaurants and bars, which rose 1.8% in May, pushing food-service sales higher than pre-pandemic levels. 

While consumer spending is expected to grow, economists predict the pace will be moderate as enhanced unemployment benefits expire and consumers spend their stimulus checks. A pickup in inflation may also cause consumers to pull back discretionary spending.

Economists predict spending will slow in the second half of the year. Eight of 13 major retail categories posted declines in sales in May. While vehicle sales hit record levels, receipts for furniture, electronics and building materials declined.

Clothing store sales rebounded 3% in May as offices opened again and people engaged in more social activities.  

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