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Can consumers positively impact the current economic outlook?
In the month of July, consumer retail purchases in the U.S. escalated even though larger scale purchases, like motor vehicles, declined. This positive trending data may shed a little light on the current market as fears of a global recession rise. Amazon Prime Day and other competitive sales may have been a contributing factor to this growth. This increased consumer spending shows faith in the economy, which is an encouraging sign that will hopefully continue.
Retail gains. Retail sales rose 0.7% for the month of July, an increase from the 0.3% increase reported for June. Compared to July 2018, retail sales rose over 3%. Online retail sales also increased nearly 3%, up from June. Retailers that saw a huge increase include Amazon and Best Buy.
Other gains. Retail stores weren’t the only ones seeing green. Building material store sales gained around 0.2%. Restaurant and bar sales inched up slightly over 1% as well. If Americans continue to spend money on everyday goods and services, contributing to economy growth, it may help turn the recession fears into restored faith.
Other economy data. Weak business development has led to a decrease in manufacturing. The economy grew at a slower pace second quarter at around 2%, compared to first quarter’s 3.1% rate. Third quarter is expected to have an even slower growth rate. Auto sales fell a little over half a percent.
Unlikely to change anytime soon. This downward trending data is unlikely to change for the remainder of the year due to the market outlook signaling a recession. Experts expect the Fed to roll out another set of interest rate cuts to stimulate the slowing growth. The U.S. Treasury yield curve inverted for the first time since 2007 earlier this week, sending waves of worry as this is historically an indicator of a recession.
Reassuring signs? The surprising gains in retail and other stores are reassuring signs for the glooming economy outlook. If consumers continue to show faith in the economy and spend, the numbers may weaken the recession outlook. However, other economy data, including manufacturing, are down and aren’t expected to turn up anytime soon. With the low unemployment rate and continuing of consumer spending, this may have a positive rippling impact for the near future.
https://www.reuters.com/article/us-usa-economy-retail/u-s-retail-sales-surge-in-july-in-boost-to-economy-idUSKCN1V51BN, Lucia Mutikani August 15, 2019
https://www.marketwatch.com/story/retail-sales-surge-in-july-in-a-reassuring-sign-for-the-us-economy-2019-08-15, Jeffry Bartash August 15, 2019