18 July 2023
Retail sales in June showed a lackluster growth of only 0.2%, falling short of the forecasted 0.5% increase. This indicates a shift in consumer spending patterns and highlights weaknesses in certain sectors of the U.S. economy. With Americans now allocating more of their spending towards services rather than goods, the reliability of retail sales as an economic indicator has diminished. While overall consumer spending remains relatively strong, there were notable declines in sales at home centers, department stores, and gasoline stations. However, furniture and electronics stores, as well as internet retailers, experienced significant sales growth. The rise in sales of new vehicles and auto parts contributed to the overall increase, but excluding car dealers and gas stations, retail sales only saw a mild 0.3% uptick, providing a clearer picture of consumer demand. Restaurant sales, which are closely monitored by economists, saw minimal growth in June, despite a year-on-year increase. Overall, retail sales have stabilized after a surge in previous years, as consumer focus shifted to services such as travel, dining out, and recreational activities. While total consumer spending continues to outpace inflation, market reaction to the retail sales report led to a lower opening for the Dow Jones Industrial Average and S&P 500.