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Consumer Spending Rebounded in July As Inflation Eased
August 15, 2024
Consumer spending rebounded in July as inflation pressures continued to ease.
Retail sales, which track consumer spending in stores, online, and at restaurants, accelerated 1% for the month, according to the Commerce Department. That is far higher than the 0.3% gain that economists polled by Dow Jones had expected. It is also a strong rebound from June’s sales figures, which were downwardly revised to show a decline of 0.2% rather than being flat as initially reported. Excluding auto-related sales, sales were up 0.4%, also better than the 0.1% that economists expected.
The Commerce Department’s data is adjusted for seasonality, but not inflation. July’s boost in sales comes in the same month that annual inflation fell to its lowest level in more than three years. The monthly increase of the consumer price index (CPI) in July was 0.2%, which means that the gain in retail sales far outpaces the increase in prices.
The gains in sales were broad-based, with a number of categories seeing increases. Motor vehicle and parts dealers saw an increase of 3.6% amid falling vehicle prices. Electronics and appliance stores saw an increase of 1.6%, a welcoming sign that consumers are still willing to make big-ticket purchases. Sales at gas stations were up just 0.1% on the back of lower gas prices.
All told, the Commerce Department report shows a strong consumer base and comes as a relief after a disappointing jobs report in recent weeks stoked concerns about an economic slowdown.
