Retail sales in May loomed larger than life when the actual report hit the tape. While the monthly Chain Department store sales did not show a great deal of life except for discounters and the Fed Beige Book, out just one day before, was silent on the issue, rebate spending seems to have been a large factor in May.
Two caveats to this optimism: Motor vehicle sales were stronger than expected in this report. (1) Retail sales include USED car sales and they are not part of the month end PCE report or of GDP. (2) To the extent the consumer spent on imported items that stimulus will be lost to the US, boost imports and subtract from GDP sending its stimulus effect overseas.
Spending in Q2 by the consumer right now is only running at about a 1% annual rate in real terms through two months.
The spending of rebate checks remain an important trend to follow...