Retail sales slump in July
Summary
Retail sales in the United States dropped by 0.6% in July, the largest decrease in over a year, showing that consumer spending slowed after strong growth earlier this year. This slowdown, along with weak jobs data and low inflation, suggests the Federal Reserve may pause on raising interest rates in the near future.Key Facts
- Retail sales fell 0.6% in July, below the expected 0.1% increase.
- Even when removing gas stations and car dealers, sales declined by 0.3%.
- Sales at auto dealers dropped 2%, gasoline stations 0.9%, and electronic stores 0.5%.
- Early timing of Amazon’s Prime Day and the previous month’s World Cup spending affected July’s numbers.
- The retail control group, a key measure for GDP, fell 0.4% instead of rising as predicted.
- Consumer spending contributed strongly to GDP growth in the second quarter but showed less momentum going into the third quarter.
- The stock market is strong, gas prices are lower, and unemployment is low, so no large spending drop is expected.
- The data indicates a pause in big increases in consumer spending rather than a significant decline.
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