US retail sales rose 0.5% in April, driven largely by a surge in energy prices due to the ongoing conflict with Iran. While the sales figures showed growth, analysts cautioned that the increase was “nominal” because it was not adjusted for the inflation rate that is escalating nationwide.
A 12.3% jump in gasoline prices during the month was the main factor driving up retail sales receipts. For now, consumers are able to maintain spending levels in other sectors thanks to higher tax refund assistance from the government for 2026.
However, internal banking data shows early signs of financial stress. Low-income consumers are reportedly spending their tax refunds faster on daily expenses than on debt payments, reducing the cash savings needed to cushion future price shocks.
US consumer sentiment also fell to a historic low in early May. This situation is exacerbated by the economic reality that cost of living increases have now officially outpaced wage growth for the first time in three years, a worrying trend for long-term economic stability.
Overall, consumer spending, the main driver of US GDP, is showing signs of cooling. After growing rapidly in 2025, the annual growth rate for the first quarter of 2026 has slowed to 1.6%, reflecting a more cautious attitude among Americans amid geopolitical uncertainty and energy inflation.
