“Ain’t No Stoppin’ Us Now” is a 1979 disco song performed by the R&B duo McFadden & Whitehead. American consumers agree. A well-balanced labor market and the wealthiest retiring generation ever continue to power consumer spending, says Ed Yardeni, editor of Yardeni QuickTakes.
For a long time now, their doubters warned that a low savings rate, flatlining real disposable income, rising consumer debt, and mounting affordability challenges would force households to retrench. Instead, they continue to do what they do best – namely shop!
Retail sales (including food services) rose 0.2% month-over-month in June after a 1% gain in May. The slowdown largely reflected a 5.3% drop in gasoline station sales as pump prices fell by roughly 50 cents per gallon.
Excluding gasoline, but including food services, sales increased a solid 0.7%, with gains across the board. Nonstore retail sales jumped 1.9%, the largest monthly increase in a year, likely boosted by Amazon's Prime Day. Encouragingly, control group sales, a key input into GDP goods spending, rose by 0.5%. For Q2 as a whole, control group sales advanced at a remarkable 9.2% annualized rate.
Several sales categories rose to new record highs in June, including discretionary areas such as motor vehicles, electronic shopping, and general merchandise. Food services, the only services category in the report, also climbed to a record high.
The strong retail sales report came as no surprise, as Redbook same-store sales remained strong in June. They slowed to 8.2% in the week ended July 10, but that's still a solid increase. Spending might cool in July as the World Cup ends, though.
