• Consumer spending posts surprising, record increase.

• Discretionary spending rebounds sharply, reflecting pent-up demand.

Total retail sales, including food service establishments, increased a record 17.7% (-6.1% y/y) during May following a 14.7% April decline. revised from -16.4%. The series dates back to 1967. An 8.0% increase had been expected in the Action Economics Forecast Survey. Retail sales excluding motor vehicles & parts jumped 12.4% last month (-6.6% y/y) after falling 15.2% in April, revised from -17.2%. A 5.2% rise had been anticipated. In the retail control group, (which excludes autos, gas stations, building materials & food services), sales rose 12.9% (-5.5% y/y) after a 15.4% weakening.

Retail sales excluding restaurants jumped a record 16.8% last month (-1.4% y/y), recovering a 12.7% April decline. Sales of motor vehicle & parts dealerships rose 44.1% (-3.9% y/y) following two months of sharp decline, as unit sales of motor vehicles rebounded 41.5% m/m after two months of extraordinary weakness. Gasoline & service station sales increased 12.8% (-30.8% y/y) as prices rose and stay-at-home restrictions were lifted.

Apparel & accessory store sales rebounded 188.0% in May (-63.4% y/y) after nose-diving during the prior two months. Furniture & home furnishing store sales recovered 89.7% (-21.5% y/y) after two months of sharp decline. Electronics & appliance store sales rose by one-half (-29.9% y/y) after falling for three straight months. Sporting goods, hobby, book & music store sales rebounded 88.2% (4.9% y/y) after two months of sharp decline.

Consumers continued ordering goods from home. Sales of nonstore retailers rose 9.0% (30.8% y/y) after strong gains in the prior two months. General merchandise stores sales rose a lesser 6.0%, leaving them roughly unchanged y/y. Department store sales, however, increased 36.9% (-25.8% y/y) after falling 28.1% in April. Building materials & garden store sales rose 10.9% (16.4% y/y) after declining in two of the prior three months.

Grocery & beverage store sales improved 2.0% (14.5% y/y) following a 12.8% April fall. Another nondiscretionary category, health & personal care product sales, rose just 0.4% (-10.3% y/y) after falling 14.8%.

Restaurant and bar sales rebounded 29.1% (-39.4% y/y) as dining establishments began to reopen after quarantine. Sales were off 34.6% in April and 30.0% in March.

The retail sales data can be found in Haver's USECON database. The Action Economics forecast is in the AS1REPNA database.

Semiannual Monetary Policy Report to the Congress by Federal Reserve Chairman Jerome H. Powell can be found here.