Consumers continue to spend in April

May 14, 2026

Retail sales rose 0.5% in April after March spending was revised slightly lower. Excluding autos, retail sales grew 0.7%, meeting expectations. Compared to a year ago, retail sales gained 4.9%, the strongest year-over-year reading since August of last year. Sales are not adjusted for inflation, which accelerated in April to 3.8% due to rising energy, food, electronics and services prices. 

Motor vehicle and parts dealers reported sales dropped 0.4% for the month, 1.2% lower than a year ago. Affordability continues to be the central constraint. Average transaction prices remain elevated. At the same time, a growing share of buyers is stretching loan terms to seven years, just to manage monthly payments. The K-shaped divide is visible here. According to the New York Federal Reserve Bank's first quarter Household Debt and Credit report, new auto loans expanded most among prime borrowers with credit scores of 720 and above. Further down the credit spectrum, auto delinquencies are growing: seriously delinquent auto loans climbed to 5.6%. 

Gasoline station sales rose another 2.8% in April, bringing the year-over-year gain to a punishing 20.9%. Higher fuel costs are not just a line item. They show up across the entire economy through transportation and logistics costs, landing on grocers' shelves faster than wages can absorb them. Food and beverage stores eked out a 0.8% gain but remain up just 1.4% from a year ago.

Furniture and home stores lost 2.0% in April and 3.6% from a year ago, consistent with the housing market's ongoing softness. Department store sales fell 3.2% in April and 1.2% year-over-year. Clothing stores dipped 1.5%. 

Nonstore retailers, which reflect online shopping, rose 1.1% in April and gained 11.1% from a year ago, continuing their run as an engine for retail. Electronics and appliance stores added 1.4% on the month and 7.6% on the year. Sporting goods, hobby and book stores gained 1.4% in April and a striking 13.4% from April 2025. Restaurant and bar sales increased 0.6%, a modest positive given the squeeze on discretionary budgets.

Core retail sales, which exclude autos, gasoline, restaurants and building materials stores and feed directly into the GDP consumer spending calculation, rose 0.5% in April. That suggests the consumer spending contribution to second quarter GDP will be modestly positive. With inflation compounding and real wage gains turning negative, however, that may not last.