Weak Retail Sales, Factory Production Could Mean US Economy Is Slowing Down

American consumers are buying fewer automobiles and other goods as the Commerce Department announced Wednesday that retail sales fell 0.2 percent last month. Retail sales increased by 3.1 percent in April compared to last year.

Out of the 13 retail categories the government uses to track retail sales, seven categories were down. These include clothing, health and personal care, electronics and appliances, among others. Retail sales at automobile dealers fell 1.1 percent.

Some economists have revised down their growth projections due to the Commerce Department's announcement.

"Not a great start to the current quarter, suggesting GDP growth cut to 1.5 percent (annualized rate) from 3.2 percent (pace) in the first quarter," Sal Guatieri, a senior economist at BMO Capital in Toronto told Reuters.

Morgan Stanley cut GDP growth rate for the second quarter to 1.2 percent from the bank's original forecast of 1.5 percent.

Stephen Stanley, a chief economist at Amherst Pinpoint Securities, told Bloomberg that the announcement was a "bit of a downer" but that it "doesn't change the big picture needle much." He believes that the economy could be poised for a "bounceback" in May.

In addition, a report from the Federal Reserve released Wednesday suggested that industrial output is down for the third time in four months. Factory production contracted 0.5 percent with the production of automobiles and parts being especially affected.

The slowdown could be due to President Trump's $1.5 million tax cut stimulus wearing off and also due to his administration's ongoing trade feud with China. The U.S. is anticipated to raise the tariffs to 25 percent on Chinese imports, with American consumers likely absorbing some of the cost.

The economy so far this year has been strong, with GDP growing 3.2 percent in the first quarter from January to March.