Americans are shelling out for higher gas prices while cutting back on some goods

By Bryan Mena, CNN

Washington (CNN) — The war with Iran is forcing Americans to pay more for gasoline as people cut back on purchases of some long-lasting goods.

Retail sales climbed 0.5% in April from the prior month, the Commerce Department said Thursday, down from March’s 1.6% and marking the third consecutive monthly increase. That was slightly below the 0.6% increase economists projected in a poll by data firm FactSet. The figures are adjusted for seasonal swings but not inflation.

Retail spending was up across most categories last month, but it was down at furniture stores (-2%), car dealerships (-0.5%), department stores (-3.2%) and clothing shops (-1.5%).

A measure of retail sales that strips out volatile categories — such as sales of building materials and gasoline — increased 0.46% in April, higher than the 0.2% economists projected. That figure is known as the control group, which economists say is a good measure of underlying consumer demand.

Various surveys show that US consumers have grown frustrated with price spikes associated with the conflict in the Middle East. Yet Americans may still continue to spend, so long as the unemployment rate remains low and businesses continue to add jobs. The latest employment data for April showed that to be the case, with unemployment holding steady at a low 4.3% and employers adding a stronger-than-expected 115,000 jobs that month. Consumer spending is closely tied to the health of the labor market.

Still, record-low sentiment is likely forcing Americans to change their spending habits. According to the University of Michigan’s latest consumer survey, people’s perceptions of the current economic environment plunged earlier this month, “owing to a surge in concerns about high prices both for personal finances as well as buying conditions for major purchases.”

Thursday’s report showed that Americans pulled back their spending in April on two key goods categories: furniture and cars.

This story is developing and will be updated.

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