Consumers brought in less than expected in July as a decline in car sales helped cool an economy struggling to shake off the effects of the coronavirus pandemic.
Retail sales rose 1.2% in 1.2 months, against the expected increase of 2.3% in economists surveyed by Dow Jones.
However, the news was not all letdown: excluding cars, the profit was 1.9%, for the 1.2% estimate. A separate report also showed that employee productivity went at the fastest pace in 11 years, with 7.3% up annually for the second quarter and well ahead of the estimate of 1.5% Returns.
Considered a watchdog for an economy that receives two-thirds of its consumer activity, retail sales saw an increase of 8.4% in June that recorded huge gains in furniture and appliance sales. That June number was already strong at 7.5%, but was revised higher.
However, these gains cooled as a resurgence in Covid-19 cases caused relocation activities too slowly.
Sales of electronics and appliances saw monthly sales jump by 22.9%, while clothing increased 5.7% and bars and restaurants, a sector specifically infected by the coronavirus, were up 5%.
Auto parts and car dealerships reported a 1.2% slide, bringing the headline down. Sporting goods and bookstores saw a 5% decline, while home and garden suppliers reported a 2.9% decline.
In all, it still marks the third straight monthly profit for retailers, which fell 14.7% in April and then returned to 18.3% in May as the sharp shutdown in March to stop the virus from thawing.
The past three months have shown that “consumer spending is at an all-time high,” said Chris Rupkey, chief financial officer at MUFG Union Bank. “There can be no recession in the country yet if the consumer pours out their heart like that.”
The future of the economy, and specifically consumer health, remains a question. Expanded unemployment benefits that had given disputed workers $ 600 a week on top of their normal benefits expired on July 31, and Congress still appears sharply divided over what the next bailout package will look like.
“Given continued high unemployment, retail sales in August and fall will rely heavily on the timing and scope of more government assistance,” said Robert Frick, a business economist at the Navy Federal Credit Union.
Even with GDP down 32.9% in the second quarter, calculated on an annual basis, consumers were still responsible for 67% of the expenditure. Unemployment has fallen but is still at 10.2%, while Thursday’s unemployment claim report also showed a slow-moving picture, with 28.3 million Americans still reaping benefits.
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