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Retail sales remain strong

Retail sales were unexpectedly down 1.2% in May, but as these charts show, month-to-month volatility is to be expected, while year over year growth in sales is strong, running at 7-8%. Part of the reason sales fell was lower gasoline prices, and that is hardly a cause for concern. I don't see any reason to believe that the weakness in May was the start of a slowdown in the economy. To me it looks like a weak May was simply "payback" for a very strong (+2.1%) March. Real retail sales are running at a 4-5% pace, which is consistent with a moderate recovery. 

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