The U.S. retail sales remained upbeat despite the resilient inflation. In June, the sales were stronger than in July but within the value of overall retail purchases. Thus, they are showing an upward trend. The available figures suggest steady consumer spending in July due to rising wages and reduced savings. As a result, each household is spending more money to keep up with the rising prices.
Note that the electronics, furniture and e-commerce sales have reported higher sales. Other sectors experiencing higher sales include gasoline stations, bars, restaurants and online Retail Sales. The stock markets, too, recovered from the May decline to record a sales increase in June and July.
Indeed, July has shown strong signs of recovery after the month’s sales bounced back after a historic decline witnessed from January to May. John Dow’s industrial average and the tech-heavy Nasdaq showed significant improvements. Here are the details of how vital sectors of the economy performed.
Gasoline
The increase in retail sales in July resulted from gasoline consumption and a rise in the sale of automobiles by 0.7%. According to Reuters, service stations had their sales figures increase by 3.6% despite the rise in pump price to about $5 per gallon.
Services And Other Products
On the other hand, hotel and restaurant sales increased by 1.0%, while furniture sales increased by 1.4%. But the clothing industry experienced a dip. Overall, cloth sales fell by 0.4%, while sales from online stores increased by 2.2%. The electronics and appliance retail were not left behind. They all gained by 0.4%, while the supplies stores and garden equipment dropped by 0.9 %.
In June, the receipts from selling books, musical instruments, hobbies and sporting goods increased by 0.8%.
GDP estimates show that the economy contracted by 1.6% in the first quarter. But consumers remained resilient in dealing with the high inflation rate. On the other hand, the consumer price index increased to 9.1% in the past year, meaning consumption was up despite the biting inflation.
The consumer finances held up well, rising by 9.5%, even though it was still considered low. The decline was attributed to a dipping in the equities. Equity holding fell by $3 trillion.
Generally, consumer spending continued to increase despite the rising inflation and recession concerns. The July Empire State manufacturing survey showed enormous shipments gains, indicating a possible end to supply chain disruptions that dipped sales.
This and many other reasons may have informed the Fed to increase the rate not just once but several times. The cumulative increase hit a 1% point and is considered the largest in 30 years.
Equities
July earnings pushed back the bear, making S & P 500 gain by 9.11%. The data makes July the best month since November 2020. In November, it gained by 10.75%. Note that concerns over earnings in June pushed the stocks down by -8.39% to halt the bull run and maintain the bear’s dominance.
Generally, the equity markets performed poorly in the second quarter. It declined by 16% and posted the worst performance since 1970.
In the U.S., small-cap equities, emerging market equities, and global equities also experienced record losses during the year’s first half.
Meanwhile, the hike in the interest rates has weighed down the credit and bond markets which also posted a first half decline, which was the worst in 30 years.
Thus, the rising rates and soaring inflation have pulled the growth of equities down immensely. The decline in equity markets results from several factors, including uncertainties, downcast investor expectations, and the Fed’s attempt to mop the excess liquidity.
Final Thoughts
Looking at June’s retail sales, we can confidently say that consumers are finding new ways of coping with inflation, and there is still enough momentum. Some consumers are switching jobs while others are dipping into their savings. Thus, the improving sales figures could be a sign of better things as the Fed works hard to ensure that inflation is controlled.
