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Soft Retail Sales Report Points to Stop-Start Economy, More Low Interest Rates

NEW YORK (TheStreet) -- The retail sales number is soft all over -- no really terrible details, but none that hold many clues to where the next stage of the expansion will come from either.

The Census Bureau said May retail sales rose 0.3% -- missing forecasts of 0.6% growth. April sales were revised upward, to 0.5% growth instead of 0.1% as originally reported. And category results were mostly kind of in-between, with the notable weak points being restaurant sales and the latest drop in department store sales.

The basic picture of the consumer doesn't change much. People are still shopping for things that either suggest they are buying houses or renovating them, with home-improvement store sales rising 1.1% and furniture up 0.5%, offset partly by a 0.3% dip in electronics and appliances.

The 0.2% drop in restaurant sales is the closest thing to suggesting that consumer confidence has flagged at all, but the 1.5% gain in autos, the latest in a 12-month jump totaling 11.1%,, seems to cancel out that analysis.

Big, bad numbers came from a decline in grocery store sales and clothing sales. But clothing is too small a category to matter much, and a 0.1% dip in food sales isn't going to worry policy makers much.

The takeaway is that the Federal Reserve basically has it right: The economy is still soft enough to be well into easy-money territory, if perhaps not as easy as last year. There's nothing here that points to any acceleration -- in activity, in prices, in consumers' urgency.

Now that two months of second-quarter data are in, there's not much that points to consumer spending busting out of a range slightly above 3% annual growth -- the range that policy makers already expect.

No surprises means no change in interest rates. That the only surprise you can tease out of today's numbers is negative -- even though it's not huge -- just reinforces the point that Janet Yellen & Co. are going to leave rates low well into next year. If anything, data like this may suggest that the second-quarter acceleration won't be sharp enough to stir what few near-term inflation fears the Fed may still hold.

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Tim Mullaney writes on economics, health care and technology , Follow him on Twitter @timmullaney or contact him at

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Tim Mullaney was national economics correspondent for USA Today from 2011 to 2014, and writes about economics, health care and technology. You can reach him at and follow him on Twitter @timmullaney.

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