The ongoing trade dispute with China might have dampened business confidence, but consumer confidence remains strong. This is the biggest takeaway from July’s retail numbers.
The Commerce Department said on Thursday that retail sales increased by a handsome 0.7% last month, which is the biggest monthly gain in a year. Grocery stores, online retailers, appliance stores, and clothing stores all recorded healthy gains.
Sales increased by 2.8% at online retailers, partly due to Amazon Prime Day. This year’s event generated more sales than the previous Cyber Monday and Black Friday combined. It also likely helped other non-store sellers, like to Walmart Inc., to record better sales.
It was not just the internet retailers that had a good month in July, though. The going was good for departmental stores, electronic outlets, and departmental stores as well. The same was the case with gas station sales, which improved by 1.8% last month.
That said, spending dropped 0.6% at motor vehicle dealers, while sports, hobby, health, and personal care stores registered the sharpest monthly fall of 2019 in July.
Robust consumer spending at online and offline stores is good news for the US economy, which is facing strong headwinds, particularly a persistent trade feud with China that has roiled the stock market. Global economic growth has slowed down too, which could spoil things at home further.
Despite the mounting troubles, most economists aren’t predicting a recession, in part due to strong consumer expenditure, steady job growth, and modest wage rises.
That said, if the trade war with China continues for a long time or escalates further, consumer spending might shrink, which can spell serious trouble for the US economy.