A much smaller-than-expected increase in retail sales has prompted economists to reduce their estimates for second-quarter economic growth.

Retail sales rose 0.4 percent from May, the government reported Monday, just half the 0.8 percent median gain forecast by economists surveyed by Bloomberg. In addition, May sales were revised down to an increase of 0.5 percent from 0.6 percent previously.

Consumer spending expanded at an annualized rate of 1.5 percent for the second quarter. That spending accounts for about 70 percent of the economy and is crucial for economic growth.

"The disappointing retail sales report underscores the soft end to the first half," Millan Mulraine, senior economist at TD Securities in New York, told Reuters.

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The report could mean that higher payroll and income taxes are still weighing on consumers, Michael Feroli, chief U.S. economist at JPMorgan Chase said in a commentary cited by Bloomberg.

The numbers led Morgan Stanley economists to cut their projection of second-quarter GDP growth to 0.3 percent from their prior prediction of 0.5 percent, Bloomberg reports.

At Barclays, meanwhile, economists lowered their growth forecast for the quarter to 0.5 percent from 0.6 percent, and Goldman Sachs cut its estimate to 1.0 percent from 1.3 percent, news services report. A 1.8 percent increase in auto sales accounted for much of the gain, Goldman noted in a commentary obtained by Zero Hedge. "Core sales — excluding autos, gasoline, and building materials — rose an anemic 0.1 percent," the commentary said.

Paul Dales, an economist at Capital Economics, said the retail sales figure "increases the chances that GDP grew at an annualized rate of less than 1 percent in the second quarter," according to Business Insider.

"It is disconcerting that retail sales growth lost more momentum as the second quarter progressed," he told The Associated Press.

Dan Greenhaus, chief global strategist for BTIG, predicted on Twitter that the retail sales number will indeed help push economic growth below 1 percent for the second time in three quarters.

Growth totaled 1.8 percent in the first quarter and 0.4 percent in the fourth quarter.

To be sure, Dale and other economists expect an economic rebound in the second quarter, with most forecasting growth of around 2.5 percent, according to AP.

"Job growth, income growth, rising stock prices and higher home prices all suggest a healthier state for the household sector in the second half of the year," he told the news service.

The consumer sector will rebound, Jacob Oubina, senior U.S. economist at RBC Capital Markets, told Reuters. "When you look at the forward-looking indicators like the income pie and consumer confidence, they all augur for a consumer-spending profile that's going to pick up in the second half of the year," he said.

But don't expect a huge consumer recovery, says Russell Price, a senior economist at Ameriprise. "The consumer is going to remain a solid performer in the economy, though not a stellar one. Looking forward, we'll have a slow uptake from an exceptionally weak second quarter," he told Bloomberg.

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