Consumers picked up their spending from May to June, underscoring their resilience despite painfully higher prices at the gas pump and in grocery aisles and allaying fears that the economy might be on the verge of a recession.

U.S. retail sales rose 1% in June, from a revised decline of 0.1 % in May, the Commerce Department said Friday.

The figures aren't adjusted for inflation and so largely reflect higher prices, particularly for gas. But they also show that consumers are still providing crucial support for the economy and spending on such discretionary items as furniture, restaurant meals and sporting goods.

SEE MORE: U.S. Inflation Reached 40-Year High Of 9.1% In June

At the same time, last month's spending gain is modest enough that it likely won't encourage the Federal Reserve to raise interest rates even more aggressively. Stock prices rose after the report's release.

Consumers still have significant savings, on average, bolstered by pandemic-era government relief checks and strong hiring and pay gains. JPMorgan executives said Thursday that their customers are still breaking out their credit and debit cards at a healthy pace.

The report showed consumers' ongoing appetite for nonessentials like gadgets and furniture. In fact, sales at furniture stores rose 1.4%, while consumer electronics stores rose 0.4%. Online sales showed a resurgence, posting a 2.2% increase. Business at restaurants was up 1%. But department stores took a hit, posting a 2.6% decline.

The solid figures bode well for the back-to-school shopping season, the second largest sales period behind the winter holidays. Mastercard SpendingPulse, which tracks spending across all payment forms including cash, forecasts that back-to-school spending will be up 7.5% from July 14 through Sept. 5 compared with the year-ago period when sales rose 11%.

But spending is volatile. The latest round of retail earnings reports published in May showed some slowing of spending, particularly with low-income shoppers. RH, an upscale furniture chain, cut its sales outlook for the year last month, pointing to deteriorating macro-economic conditions. It pointed to higher mortgage rates, which are slowing sales of luxury homes, indicating that even wealthy shoppers are pulling back.

Nevertheless, the overall solid spending came even as shoppers were confronted with high prices in all areas. U.S. inflation surged to a new four-decade high in June because of rising prices for gas, food and rent, squeezing household budgets and pressuring the Fed to raise rates aggressively — trends that raise the risk of a recession.

The retail sales report covers about a third of overall consumer spending and doesn't include services, such as haircuts, hotel stays and plane tickets.

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NEW YORK (AP) — Wall Street is giving back some of its strong gains from the week on Friday following discouraging readings on the global economy and another slew of profit reports from big U.S. companies.

The S&P 500 was 1.3% lower, as of 3 p.m. Eastern time, and threatening to halt a three-day rally that had carried it back to its highest level in six weeks.

The Nasdaq composite was leading the market lower with a 2.2% drop following weaker-than-expected profit reports from Snap, Seagate Technology and other tech-oriented companies.

The Dow Jones Industrial Average was holding up better, down 249 points, or 0.8%, at 31,787, in large part because constituent American Express gave an encouraging earnings report and said its cardholders were spending more.

Sandwiched between last week's dispiriting report on inflation and next week's decision by the Federal Reserve on interest rates, the S&P 500 is still on track for its best week in a month following a collection of mostly better-than-expected reports on corporate profits.

Falling yields in the bond market also helped, easing the pressure on stocks after expectations for rate hikes by the Fed sent yields soaring much of this year.

On Friday the two-year Treasury yield tumbled again, to 2.99% from 3.09% late Thursday and from 3.14% a week ago, on worries about the economy. A report Friday morning indicated U.S. business activity may be shrinking for the first time in nearly two years, with service industries particularly weak.

"Manufacturing has stalled and the service sector's rebound from the pandemic has gone into reverse, as the tailwind of pent-up demand has been overcome by the rising cost of living, higher interest rates and growing gloom about the economic outlook," Chris Williamson, chief business economist at S&P Global Market Intelligence said in a statement accompanying the survey data.

Similar reports earlier in the morning also suggested weakness in Europe, underscoring how fragile the global economy is as central banks jack up interest rates in order to whip inflation. Higher rates make economic conditions more difficult, and the threat is that too-aggressive hikes could cause a recession.

The reports follow others from earlier in the week showing parts of the U.S. economy slowing more than expected. While that raises the threat of a recession, it also has traders pulling back expectations for how aggressively the Federal Reserve will raise interest rates next week. Instead of a full percentage point, traders now see an increase of 0.75 percentage points as the most likely outcome.

The 10-year Treasury yield fell to 2.78% from 2.91% late Thursday.

In the stock market, the company behind the Snapchat app tumbled 38.9% after it reported a worse loss and lower revenue for the spring than Wall Street forecast.

The weakness for Snap could mean pressure on other tech companies that depend on advertising, which also happen to be among Wall Street's most influential stocks. The parent companies of both Google and Facebook are scheduled to report their earnings next week.

Data storage company Seagate Technology lost 8.2% after it said anti-COVID measures in Asia and slowing global economic conditions last quarter hit its results, which fell short of forecasts.

Verizon dropped 7.7% after its profit fell short of expectations, though its revenue squeaked past. It also cut its forecast for earnings this year.

On the winning side was American Express, which rose 2.1% after it delivered better profit for the spring than analysts expected. It said customers spent more on travel and entertainment in April than they did before the pandemic, the first time that's happened.

The encouraging data bolstered some recent comments from CEOs at big banks, who said their customers appear to be in solid financial shape despite all the worries about inflation and the economy.

HCA Healthcare surged 12.5% for the biggest gain in the S&P 500 after delivering better results than Wall Street forecast. Oilfield services provider

Despite Friday's drops for Wall Street, the S&P 500 is still on pace for a gain of more than 2%.

Besides the easing of Treasury yields over the week, dropping prices for crude oil and other commodities also provided some relief on the inflation front. They add to some signals suggesting inflation may be close to peaking, such as easing expectations for inflation in future years, said Nate Thooft, senior portfolio manager at Manulife Investment Management.

"Inflation is the most important thing," he said. "It's not earnings, it's not the Fed, it's not interest rates themselves. It's the uncertainty of inflation."

"To me, as soon as you see real evidence that inflation is stabilizing and improving, all the other things also become less problematic," he said. The war in "Ukraine is separate and off in the corner, but all the others are related, and the epicenter is inflation."

___

AP Business Writer Elaine Kurtenbach contributed.

Bahamas authorities announced that billions in assets connected to the downfall of the crypto currency exchange FTX is being held after its founder Sam Bankman-Fried was arrested there at the request of U.S. authorities.

Bankman-Fried did not fight extradition and was under the watch of U.S. law enforcement, facing criminal charges for defrauding investors before the crypto exchange collapsed.

He is accused of taking billions of dollars in one of the worst crypto currency failures in recent history.

RELATED: Sam Bankman-Fried plea to come in fraud case over FTX cryptocurrency exchange

Rebecca Blackwell/AP

As Reuters reported, the Securities Commission of the Bahamas announced that it will hold assets from FTX totaling around $3.5 billion and will do so based on market pricing at the time of transfer.

Authorities in the Caribbean nation will hold those assets on a temporary basis, it was announced, before they are handed over to creditors and customers of the exchange, who own those funds.

So who is the highest-paid person in the government? The answer may surprise you.

Here's a hint: It's not President Joe Biden, who reportedly makes $400,000 a year as Commander in Chief.

Mark Scribner, Managing Director at Oxygen Financial, tells Newsy that this person is Dr. Anthony Fauci, the Director of the National Institute of Allergy and Infectious Diseases.

Lindsay Tuchman: "So, why does Dr. Fauci make more money than the President of the United States?" 

Mark Scribner: "So, his package, it's about $440,000 a year, and then he has a lifetime pension of $380,000 a year. He is part of an old federal system, I think there's only a handful of people still left. It's called the CSRS system, and it was disbanded in 1987. So, he's part of an old package that was not very effective for pensions, that was costing the government way too much money, so they stopped it, but he's still on that program."

Tuchman: "So, and in part has to do with just his longevity of serving in the position that he's in?"

 

Scribner: "You know, I'm a financial advisor, I have clients that work for the FBI, ATF, and they've had the same tenure in terms of length of service. They don't have those kinds of packages, they are, you know, maybe $80,000 a year in pensions, they have a million dollars in their retirement accounts, Dr. Fauci has about $10.4 million in his investment accounts, so there's definitely a disparity." 

Tuchman: "Interesting. So, as we're talking about government employees making money, there's the salary of course, but we've also seen politicians on both sides of the aisle profiting off of the stock market, and sometimes it's due to some information that they have, or something that they know about, and that of course, faces a lot of criticism. What are your thoughts on making sure that doesn't happen in any, sort of way that could be seen as something to be criticized?" 

Scribner: "Well, for your viewers, there's a great website called Unusual Whales and it goes through each politician and it's not a, it's not a red or blue type of a topic, it's all across the board, but they are definitely having access to inside information. Now, I'm a financial advisor and there's a term called 'front running,' that basically prohibits us from buying an individual stock for our own accounts ahead of a client account, but they have access to trade deals, all kinds of big announcements and they buy individual stocks, and this was something that was attempted to be resolved, and it's called the Stock Act. It got watered down in 2013, but they are buying ahead of, you know, some major announcements, major trade deals, and it actually ruins the integrity of the market when you know, they have access to inside information that the average person can't. It's completely unacceptable and I think it just erodes trust for the consumers."

This report was originally published by Lindsay Tuchman of Newsy.