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Washington
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Americans are still opening their wallets, boosted by low unemployment and improving consumer sentiment.
Spending at US retailers rose 0.5% in July, the Commerce Department said Friday. That’s down from June’s upwardly revised 0.9% gain, and in line with economists’ expectations. Retail sales are adjusted for seasonal swings, but not inflation.
Consumer sentiment plummeted in the spring as President Donald Trump carried out his erratic trade war, but Americans haven’t cut back. Consumers are still powering the US economy with their spending, which contributes about 70% of economic output.
Retail sales picked up across categories last month, especially at car dealerships and furniture stores, which saw sales climb 1.6% and 1.4%, respectively. Online sales jumped 0.8% in July, coinciding with Amazon’s Prime Day sale. Spending also picked up at gas stations and department stores.
Meanwhile, spending was down among only a handful of categories, including home improvement stores (-1%) and electronics retailers (-0.6%). Restaurants and bars also saw sales decline in July, falling 0.4% and extending an unusually weak period of sales growth.
A subset of retail sales that excludes volatile categories — known as the “control group” — rose 0.5% in July, slightly better than the 0.4% gain economists projected in a FactSet poll. That measure is seen as a better gauge of underlying consumer demand.
Even after factoring in July’s 0.2% monthly increase in consumer prices, according to the Consumer Price Index, retail sales were still up a healthy 0.3% last month.
“As long as consumer spending holds up and companies are able to retain workers because of that robust spending, the flywheel can continue to spin, pushing corporate profits and stock prices higher,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in commentary issued Friday.
This story is developing and will be updated.
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