Consumer confidence jumped in May to its highest level in more than two years, but the U.S. Commerce Department reported that retail sales dropped 1.2% for the month--ending a seven-month streak of gains, according to The Washington Post.

The 1.2% decline in May sales was the largest decline since sales had fallen 2.2% in September. Auto sales were down 1.7%, and there was weakness in a number of areas, the Associated Press (AP) reported. Department store sales fell 1.8%, while sales in the broader category of general merchandise stores, which includes big retailers such as Wal-Mart, fell 1.1%.

The big decline cast new doubts about the strength of the economic recovery, the AP observed. Consumer spending accounts for 70% of total economic activity. Economists are concerned that households will start trimming outlays as they continue to be battered by high unemployment and a swoon in stock prices.

"May retail sales results represent a reminder of the uncertainty that still exists in the economy," said National Retail Federation (NRF) President and CEO Matt Shay. "The road to recovery is paved with caution as consumers remain concerned about key indicators such as employment and housing."

NRF Chief Economist Rosalind Wells added: "Even though May sales were not as strong as previous months, we remain encouraged by the steady pace of the economic recovery. Ultimately, consumer momentum will be tied to our economy's ability to add private sector jobs."

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