The Census Bureau reported on Thursday that a key measure of August US retail sales unexpectedly rose 0.3% on a month-on-month basis, after revised down 0.4% for the month. Seven. Retail sales, not adjusted for inflation, were up 9.1% from a year ago.
Of the 13 categories of retail spending tracked by the Census Bureau, eight grew in August. Spending at food and beverage retailers rose 0.5% on the month and rose 7 .2% in the past year. Sales at restaurants and bars rose and car dealerships rose 2.8% for the month. Spending on construction materials and equipment, clothing and sporting goods also increased.
Doug Hermanson, chief economist at Kantar, said it “could have kept a lot of school shoppers in store”. “Gasoline prices have dropped over the past few months… From a parent’s point of view, it frees up a bit of cash they didn’t think they’d have in May or June.”
Spending in August at gas stations as well as at furniture retailers, electronics stores, health and personal care stores, and out-of-store retailers fell. Market observers suggest that out-of-store sales, a rough proxy for e-commerce, are likely to drop in August due to the timing of Amazon’s Official Day in July.
The retail report showed that the drop in gas prices was the main factor helping Americans cope with last month. This raises the worrying prospect that a spike in the cost of gas or heating in a home in the winter could cause significant outages, as consumers today have less flour. drier than it was a year ago, when household balance sheets were better consolidated by savings from the lockdown and government support.
“I think consumers are reacting to a number of things,” said Luke Tilley, chief economist at the Wilmington Trust.
He says the pain at the pump exacerbates this. “Gas price Definitely a challenge for consumers. They are very much like a tax. If we see another spike in gas prices, we’ll see weaker spending in a lot of these other retail categories. ”
A delicate balancing act for the Fed
At its meeting next week, the central bank is expected to raise its benchmark interest rate by 75 basis points (or 3/4 of a percentage point) for the third time in a row.
“The Fed is on the right track to emphasize that it will rely on future data … rather than trying to forecast,” said Ross Mayfield, investment strategy analyst at Baird.
However, Fed officials will also have to take into account trends such as the surprising downward revision to July retail sales data, which was recalculated to reflect a 0.4% decline from the previous year. original result remains the same. This shows consumers are starting to show fatigue, analysts say.
“Consumers are still spending. However, in many cases, they are buying less homes,” Stifel’s chief economist, Lindsey Piegza, said in a research note. “With inflation continuing to climb relentlessly, shoppers are struggling to keep up with rising prices eroding purchasing power,” she said, adding that changes in spending patterns shows that consumers are starting to worry about their financial security.
Ted Rossman, senior industry analyst at Bankrate, says there is evidence that the balance sheets of wealthy households are growing while lower-income families struggle to buy necessities. staples, but this economic stress is increasing the income spectrum.
“I think we are starting to see that increase,” he said. [It’s] erode people’s savings. We see it in things like credit card balances, which he says are hitting record highs.
