The U.S. Department of Commerce reported earlier this morning that retail sales inched up by just 0.1% in April, following outsized gains from January through March, with the final month of the opening quarter showing a slightly downwardly revised increase of 0.7%. Initially, the March increase had been tabulated at 0.8%.

Helping the March performance was the early onset of Easter this year; conversely, the absence of such holiday spending hurt the April numbers at the nation's retailers. All told, retail trade sales were up a solid 6.1% from the prior year. However, the weak April showing, at least on a consecutuve-month basis, may call into question the hoped-for better-than 2% increase in second-quarter gross domestic product growth. For now, we are not adjusting our forecast for the current three months, as we still expect GDP to narrowly exceed the 2% mark, and come in more or less in line with the opening period's 2.2% gain--a rather pedestrian pace, which will keep open the Federal Reserve's options in perhaps stimulating the economy some more--with a possible QE3 program. For now, though, we sense that the Fed will hold the line on such endeavors, in hopes that earlier efforts will do the job. We will see.

Hurting spending last month, in addition to the early Easter, was the continued high rate of unemployment in this country and the weakened state of the housing market. With many homeowners facing equity losses in their homes, and some residences in danger of being lost to foreclosure, or sold at depressed prices because of job losses or other personal reversals, there is little inducement to spend aggressively at the nation's retail counters.

Another problem has been high gasoline prices, which have taken more of consumers' spending dollars than would normally be the case. However, gas prices have been coming down. Indeed, a report issued at the same time as this metric was released noted that consumer price inflation was benign in April, showing no change in the aggregate, with the core CPI reading, which excludes the volatile food and energy components registering just a slight 0.2% increase last month.

As to this report, we saw solid gains in sales of furniture and home furnishings, but a sharp drop in sales of building products and garden equipment. Also, children's clothing and department store sales faltered, while food establishments and drinking places did well.

On the whole, though, this was a disappointing report, but one that was fully expected after the strong performance from January through March.   

At the time of this article's writing, the author did not have positions in any of the companies mentioned.