By John S. McClenahen If American consumers are becoming more cautious about the domestic economy, their spending didn't really reflect it in May. Retail sales were a seasonally adjusted $335.8 billion, up 1.2% from April, the U.S. Commerce Department reported on June 14. The percentage increase was one-tenth of a point higher than the 1.1% economists generally expected. "So far, despite consumers' gloom and the drag from higher gasoline prices and less [home] refinancing activity, U.S. shoppers do not appear to be scaling back much," says UBS Investment Research, New York. Consumer spending accounts for about two-thirds of U.S. economic activity. The Commerce Department also reported on June 14 that the U.S. trade deficit for goods and services was a monthly record of $48,327 billion in April, as imports of $142.269 billion far outpaced exports of $93.942 billion. Indeed, April exports were $1.457 billion below March's. "After exports grew an incredible $6.5 billion from January to March, a decline in April was to be expected and should not be interpreted as anything but a one-time correction," asserts Jerry J. Jasinowski, president of the National Association of Manufacturers, Washington, D.C. Others also discounted the April drop in exports. "We continue to look for GDP growth of about 4.5% annualized this quarter, a pace sufficient to narrow the output gap and give the Fed cause to tighten," says UBS. "We still look for a 25-basis-point tightening on June 30."