In the month of May, the retail sales spiked to $502 billion, a .8 percent increase from the month before, according to the Commerce Department.
May's retail sales beat expectations.
Economists polled by Reuters predicted that retail sales would increase by .4 percent in May.
The Commerce Department also said that April's retail sales were revised from the .2 percent to a .4 percent spike.
Specifically, Americans spent more on healthcare products, cars, building supplies, clothing, and other goods in May.
"Retail sales aren’t adjusted for inflation, and one factor behind the latest rise in spending is higher prices retailers are charging for their items. For example, a rise in gasoline prices, tied to rising oil prices, helped push up sales at gasoline stations by 2% last month," writes the Wall Street Journal. "But Americans’ spending on goods is rising even after accounting for inflation. Retail sales rose 5.9% in the year through May, roughly double inflation, as measured by the Labor Department’s consumer-price index."
The surge in spending is being attributed to the low unemployment rate, rising wages, and the recent tax cuts.
The Labor Department also announced this week that weekly unemployment claims fell to a 45-year low.
There was also a reported 6.7 million job openings in April.
The unemployment rate is currently at 3.8 percent and is expected to reach 3.6 percent in 2018 and 3.5 percent in 2019, according to the Federal Reserve.
The Fed estimates that the gross domestic product (GDP) will spike by 2.8 percent this year. The agency said that "economic activity has been rising at a solid rate" and "growth of household spending has picked up."
With that in mind, the Fed announced on Wednesday that it will be raising the short-term interest rates for the second time this year.
The Fed is expected to raise rates two more times in 2018 in order to contain the 2.1 percent inflation rate that the economy will likely hit this year.
“With ‘strong’ job gains and ‘solid’ economic growth, and ‘strongly’ growing business investment, the Fed is clearly sold on continued growth. Inflation has moved ‘close to 2 percent,’ the target range, while longer-term inflation expectations are still in line,” said Brad McMillan, chief investment officer for Commonwealth Financial Network to Fox Business. “This statement is as close to a declaration of victory as we will ever see.”
Author's note: This is what happens when you have a businessman in office. The Fed is raising interest rates in an attempt to control the economy from bursting and to also hold off inflation. As the rates increase, we will then have some room to lower them again to stimulate the economy when needed. This means stability.