Retail Sales Drop in June as Automobile Sales Drop


Retail sales rose in June, an unexpected jump as American consumers increased spending on dining out and purchasing clothing and gadgets, even as sales of other products such as cars fell, the Commerce Department reported on Friday.

The 0.6 percent increase last month came after the decline in spending in May. But the data also highlighted the inequality of the economic recovery. Auto and auto parts sales fell 2 percent, while sales at clothing stores and electronics stores increased. With the increase in gas prices, spending at gas stations also increased sharply.

June sales were better than economists expected. After falling to record lows about a year ago, sales have rebounded this spring and are now fluctuating month-to-month as the economy reopens. However, economists think that sales will also be negatively affected due to new fears about the Delta variant of the coronavirus and rising prices.

Consumer price index Earlier this week, the Labor Department recorded its fastest rise in 13 years in June as inflation accelerated. A survey by the Federal Reserve Bank of New York also revealed that consumers expect higher expectations. inflation in the near term and for several years.

“You’re starting to see an increase in inflation expectations that could make consumers more cautious about opening their wallets when spending,” Beth Ann Bovino, chief economist at S&P Global Ratings Services USA, said ahead of Friday’s announcement. .

Ms. Bovino said spending has also shifted from durable goods such as electronics and furniture to leisure activities. This expenditure is not reflected in Friday’s report.

“This report captures only a small sliver on consumer spending, restaurants and bars, but misses all travel,” he said.

The shortage also helped drive up prices, especially for used cars. Used car prices rose 10.5 percent in June, the government reported earlier this week. Economists say the combination of low inventory and high prices discourages car buyers. Excluding autos and auto parts, retail sales rose 1.3 percent in May.

Economists also suspect that spending is affected by this. States with early withdrawals from federal unemployment insurance programs, cutting the $300 per week that was added to benefits last year. Twenty-four states stopped paying extended benefits, most benefits were cut in June, and a Bank of America analysis of credit and debit card spending showed spending in states that ended benefits saw a drop in consumer spending last week. .

The states that withdrew aid said the aid was deterring people from seeking employment at a time when the economy reopened and some businesses struggled to find staff. Economists argue that cutting benefits may hurt personal incomes more than help alleviate worker shortages.

“Enhanced unemployment benefits represent only a marginal deterrent to work,” analysts at Oxford Economics wrote in a note Thursday. “States where unemployment benefits are highest relative to current wages have the greatest deterrence among low-wage workers.”


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *