• Retail sales declined 0.9%, even more than the 0.6% drop expected from the Dow Jones consensus.
• However, excluding a series of items such as auto dealers, building materials suppliers, gas stations and others, sales increased 0.4%.
• The pullback in retail sales came despite surveys showing that consumer sentiment actually increased in May.

The article concludes:

The pullback in retail sales came despite surveys showing that consumer sentiment actually improved in May, though compared with levels that had been falling through the year. The ongoing trade war ignited by President Trump’s tariffs had dented consumer and business optimism, though an easing in some of the rhetoric amid a 90-day negotiating period has led to better readings.

GDP declined at a 0.2% annualized pace in the first quarter but is projected to rebound. Second-quarter growth heading into the retail sales release was pegged at 3.8%, according to the Atlanta Federal Reserve’s GDPNow tracker of rolling data. The gauge will be updated later Tuesday.

In other economic news Tuesday, import prices were flat against a forecast for a 0.1% decline, according to the Bureau of Labor Statistics. Export prices fell 0.9%.

We are in an economic transition period right now. I am hopeful that when the smoke clears, income taxes will be lower, the amount of revenue going to the government because of tariffs and the fact that revenue increases when taxes are lower (see laffer curve), government spending will be down, and Americans will have higher wages and more buying power.