Retail Sales are the total amount of merchandise and related services sold to consumers. It is considered a sign of strength of U.S. Consumer spending, which accounts for roughly two-thirds of the economy. This indicator also provides insight into which areas of the retail space are experiencing strong sales.
In June, retail sales rose by 1.0% to $680.6 billion, beating estimates of a 0.8% advance. May’s print was also upwardly revised, although it remained negative at -0.1%. Three out of the four broad categories that make up the report reported higher sales last month. Spending at bars and restaurants also rose by 1.0% to $86.1 billion, sales at sporting goods and hobby stores increased 0.8% to $9.2 billion, and sales at electronics and appliance stores advanced 0.4% to $7.7 billion. However, clothing and apparel sales posted their second consecutive monthly decline, falling 0.4% to $25.8 billion.
Consumer spending rose last month after posting a small decline in May—at least in nominal terms. It is important to remember that the headline retail sales number is not adjusted for inflation. Sure, shoppers spent roughly 1.0% more in June than they did the previous month, but consumer prices went up by 1.3% during that same period, meaning that retail sales actually declined in real terms. This suggests that consumers are spending more due to higher prices, not because they are purchasing more goods and services. Retail sales have not seen a boost in inflation-adjusted terms since April, and on an annual basis, they have been down since March. It certainly does not help that, for the past eight consecutive months, workers have been getting a pay cut in real terms. For an economy that relies heavily on consumer spending to grow, that is reason for concern. Now, many consumers still have plenty of savings left over and wages are still growing, even if they are not necessarily keeping up with inflation. Consumers can bear higher prices for now, but it is unclear how long that will last.
July 15, 2022