Consumer prices keep rising. That hasn’t stopped shoppers from spending.
US retail sales rose a solid 0.5 percent in July, which was modestly lower than analysts’ expectations, according to the Commerce Department’s Census Bureau.
Americans snapped up motor vehicles and pounced on deep discounts from Amazon and Walmart.
That follows an upwardly revised 0.9 percent gain in June.
Compared to a year earlier, shoppers spent 4.3 percent more in July.
But not all of that was because people were filling carts with more items – retailers said they only sold 1.4 percent more products, meaning higher prices are still padding the numbers.
Independent analysts tell Daily Mail the numbers were respectable, but not explosive.
‘July’s retail sales figures weren’t necessarily a blowout, with headline figures missing expectations,’ Bret Kenwell, a US investment analyst at eToro, told the Daily Mail.
‘But in a world where there are plenty of macro-related worries tied to inflation and employment, consumers are still out there spending.’
Customers keep spending at stores, including cost-cutting retailers that promote bargains, like Walmart
Deals, cars, and pencil sharpeners
Some of July’s sales bump was inspired by value – shoppers rushed to America’s biggest stores to secure deals during Amazon’s extended Prime Day and Walmart’s six-day Deals event.
‘Prime Day and the associated retail events around it were helpful to the month and can be seen in the elevated level of non-store growth, where sales rose by 8.3,’ Neil Saunders, retail expert at GlobalData, told the Daily Mail.
‘This partly shows the consumer receptiveness to deals and offers, especially in an environment where there is nervousness around future price increases.’
Shoppers were also motivated to snap up back-to-school deals.
Analysts at JPMorgan also pointed to a rush to buy battery-powered EVs ahead of the September 30 expiration of certain federal tax credits, which juiced auto sales.
Plus, a rush to buy battery-powered EVs ahead of the September 30 expiration of federal government tax credits helped to drive automobile sales in July, analysts at JPMorgan said.
But downside risks to consumer spending are steadily rising. Middle- and higher-income households are mostly driving spending.
Amazon’s CEO, Andy Jassy, decided to extend the company’s Prime Day sales event – it led to robust spending growth across the economy
Bank of America Institute said an analysis of deposit data showed a widening in the wage gap between lower-income and higher-income households, an indication the labor market ‘appears to have deteriorated most significantly for lower-income workers.’
It said while lower-income households might not be losing their jobs, ‘soft labor demand is pressuring their pay and they are potentially working fewer hours.’
Meanwhile, economists have noted major pullbacks in other high-spending areas.
‘We see evidence of people pulling back in areas like travel because of economic pressures,’ Saunders added. ‘This helps them keep retail spending inflated.’
Meanwhile, experts noted that some of the largest tariff-related price spikes may not have reached US consumers.
Yesterday, the US Labor Department reported that wholesale inflation, data that measures inflation before it hits US customers, jumped 0.9 percent in one month.
Analysts typically use the metric as a predictor of incoming price hikes at retail and grocery stores. Economists predicted the number would be lower.
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