U.S. retail sales inch higher and point to stable economy
By Jeffry Bartash
Lower car sales hold down consumer spending
The numbers: Sales at retailers rose slightly in August in a sign of resilience among U.S. households, suggesting the U.S. economy is still on solid footing.
Sales inched up 0.1% last month, the government said Tuesday.
The increase was better than expected. Economists polled by the Wall Street Journal had forecast a 0.2% decline on the expectation that car sales last month would be a big drag. But they weren't.
If automobiles are omitted, retail sales were still up 0.1%. That was a hair below the 0.2% forecast.
Retail sales represent about one-third of all consumer spending and offer clues on the strength of the economy.
Sales have risen at a modest 2.1% pace in the past 12 months. Before the pandemic, retail sales rose by about 3.6% a year.
Key details: The details of the retail report were just so-so.
Sales of new vehicles and automotive parts, an up-and-down category, slipped 0.1% last month.
Sales also decreased at grocery stores, big-box retailers, department stores and clothing stores.
Yet part of the decline stems from lower prices for goods, bringing some relief to consumers. Goods prices have fallen in the last three months and in six of the last eight.
Restaurant sales, a key economic bellwether, were flat in August, ending a string of four straight increases.
Restaurant sales tend to rise when the economy is healthy and Americans feel secure in their jobs. Right now they are signaling a stable economy.
Big picture: Consumers are spending more than enough to keep the economy growing. Household spending accounts for about 70% of U.S. economic activity.
Don't look for spending to ramp up anytime soon, however, even with the prospect of the Fed cutting interest rates.
Why? Inflation has waned, but several years of big increases have left households stretched. The labor market has also cooled off. Unemployment has crept higher, and it's talking people longer to find jobs.
Looking ahead: "The trend over the past several months shows that consumption continues to drive the expansion, and that the economy does not appear to be on the brink of recession," said economist analyst Mark Streiber of FHN Financial.
Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX rose in Tuesday trading.
-Jeffry Bartash
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
09-17-24 1007ET
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