Washington
CNN
—
It’s been a disappointing few months for American retailers, but the consumer isn’t tapping out quite yet.
US retail spending has been mostly flat since the beginning of the year, holding steady in June, the Commerce Department reported Tuesday. Consumer spending is American’s main economic engine, powering two-thirds of the US economy. Retail sales, which capture spending on goods and food services, make up a big chunk of overall spending.
June’s reading was better than the outright decline economists projected in a FactSet poll — a shift from prior months when retail sales consistently came in worse than expected. The figures are adjusted for seasonal swings but not inflation.
Sales at gas stations declined the most last month, dropping 3% from May. Spending at car dealerships and on automotive parts also fell markedly in June. Excluding that, retail sales were up 0.4% last month.
Meanwhile, online sales were up a healthy 1.9% in June. The strength from that category could persist in July due to Amazon’s annual deal event known as Prime Day. Sales at home improvement stores were also robust last month, rising 1.4%.
The Federal Reserve and Wall Street investors are paying close attention to the health of the US consumer. Unemployment has crept up in recent months as evidence mounts that the American shopper is spending more cautiously nowadays. The economic landscape has proven challenging for some consumers in a few ways.
Inflation has resumed a downward trend, but it’s still elevated; interest rates have been perched at a 23-year high for about a year now; savings accumulated during the pandemic have been exhausted by now, according to some measures; and job opportunities aren’t as ubiquitous as they were a few years ago.
Retailers have said in recent months that a growing number of shoppers are now opting for cheaper alternatives. As earnings season kicks off, big-box stores are set to share some key details on Americans’ spending behavior.
There is plenty of evidence by now that the US economy is slowing, but it likely won’t fall off a cliff this year. Fed officials and most economists aren’t expecting a recession this year, but it’s unclear whether unemployment will hold steady or continue to climb after it rose to a 4.1% rate in June, the highest since November 2021.
This story is developing and will be updated.