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April Retail Sales Stall as Stimulus Boost Fades, Inflation Bites

April retail sales were unchanged from March at $619.1 billion, the Commerce Department said Friday.

U.S. April retail sales fell notably shy of Wall Street forecasts Friday as the impact of government stimulus, in the form of the American Rescue Act, faded and consumers pulled back spending in the waning months of the pandemic.

April retail sales growth was unchanged from last month at a collective $619.1 billion, the Commerce Department said, well shy of the Street consensus forecast of a 1% gain. The March total, however, was revised sharply higher, to a gain of 10.7%. Stripping out auto and gasoline sales, retail sales were down 0.8%, the Commerce Department report noted.

"The consensus forecasts always looked a bit optimistic, though in truth there were so many cross-currents in April that all forecasts were made with crossed fingers," said Ian Shepherdson of Pantheon Macroeconomics. "But the underlying trend over the next few months will be supported by the full reopening of the economy, which we expect will be followed by a long drawdown of some of the hundreds of billions of dollars of savings accumulated during the pandemic."

Consumer price increases may have also crimped spending, with April inflation rising 4.2% from last year, according to data from the Bureau of Labor Statistics published earlier this week, the fastest pace since 2009. 

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Wage pressures are beginning to mount in the labor market, with JOLTS job openings data indicating 8.1 million open positions, the highest on record, while last week's April non-farm payrolls reported showed average hourly earnings rise 0.7% on the month -- against a forecast of -0.1% -- and 0.3% on the year. 

U.S. equity futures pared gains in the wake of the data release, with contracts tied to the Dow Jones Industrial Average indicating an 85 point opening bell gain and those linked to the S&P 500 priced for a 20 point advance.

Nasdaq Composite futures, meanwhile, were indicating an opening bell gain of 125 points, but still on pace for the tech-focused benchmark's fourth consecutive weekly decline, the longest losing streak in nearly two years.