Americans stepped up their retail spending last month, a sign that recent worries about cautious consumers dragging on growth may have been overdone.
The Commerce Department said Friday that retail sales rose 0.5% in May, after a smaller gain of 0.3% in the previous month. April’s figure was revised up from an earlier estimate that had showed a decline.
The report suggests that American consumers are still spending at a healthy pace, even as the stimulus from tax cuts fades. In June, the economy reached its 10th year of expansion, tying the 1990s as the longest on record. Measures of consumer confidence, after stumbling this spring amid the ongoing U.S.-China trade war, have returned to nearly 19-year highs.
The figures also lessen pressure on the Federal Reserve to cut short-term interest rates. Other recent data, such as weak job growth in May and choppy consumer spending earlier this year, has led most economists to expect at least one or two cuts this year.
“The consumer didn’t fall by the wayside,” David Berson, chief economist at Nationwide Financial, said. “The concerns that the economy is really slipping dangerously are overstated at this point.”
Retail sales had been uneven earlier this year, making it harder for economists to get a handle on consumer spending. But with April’s revision, sales have now increased for three straight months. And with the unemployment rate at a five-decade low of 3.6% and wage gains easily outpacing inflation, consumer spending will likely keep growing this year.
Quicken Loans settles lawsuit
Quicken Loans has agreed to pay $32.5 million to settle a lawsuit that accused the company of fraudulently sticking the government with bad mortgages.
Crain’s Detroit Business says the agreement, with no admission of wrongdoing, was disclosed Friday by Gerald Rosen, a former judge who served as mediator.
The government had accused Quicken of cutting corners when verifying the income of certain borrowers. Quicken also was accused of seeking improper appraisals so it could make a larger mortgage. The loans were insured by the Federal Housing Administration, which paid Quicken if a borrower defaulted.
The Detroit-based company denied the allegations and had described the lawsuit as “abusive.” Quicken will remain in the FHA program after the agreement.
Quicken’s founder is Detroit businessman Dan Gilbert, who owns the NBA’s Cleveland Cavaliers. He is recovering from a stroke.
Investment firm buys Whataburger
An investment firm has purchased a majority stake in Whataburger as the Texas-based fast-food company seeks to expand in an increasingly competitive market.
Whataburger announced Friday that the purchase by Chicago-based BDT Capital Partners should be finalized by the end of the summer and will be subject to regulatory overview. Terms of the deal were not disclosed.
BDT will provide long-term capital and guidance as Whataburger, which has its headquarters in San Antonio, competes at a time when convenience stores are offering more food options and eating into market share.
The firm often invests in family-owned companies.
The first Whataburger opened in 1950 as a small roadside burger stand in Corpus Christi. It now has nearly 700 restaurants in Texas and more than 150 others in southern states extending from Arizona to Florida.
Trump top continues criticizing Fed policy
President Donald Trump says he has no intention of ending his public attacks on the Federal Reserve’s interest rate policies even though he knows he has made Chairman Jerome Powell’s job more difficult.
Trump told ABC News in an interview released Friday that he thinks economic growth and stock market indexes would be substantially higher if the chairman “wouldn’t have raised interest rates so much.” The Fed raised rates four times last year. But Powell has signaled that the Fed is prepared to cut rates should it decide that Trump’s trade war with China threatened the economic expansion.
The Fed has long sought to operate free of political influence to maintain its credibility as the world’s leading central bank. Powell, whom Trump elevated to chairman, has said before that he wouldn’t resign despite pressure from Trump.
In the ABC interview, which will air Sunday, Trump is asked if he was concerned that his public attacks on Powell were inappropriate and were putting the Fed chairman “in a box.”