ARLINGTON, Va.—Total retail sales grew by 1% in June, following a decrease of 0.1% in May and an increase of 0.7% in April.
“Retail sales rose by a solid amount in June, but inflation is eating away most of those gains,” said NAFCU Chief Economist and Vice President of Research Curt Long. “In real terms, consumer spending is slowing, which bodes well for the inflation outlook but which also heightens recession concerns.”
Sectoral performance was mostly positive in June with gas stations seeing the biggest increase with 3.6% growth in sales followed by nonstore retailers (2.2%), furniture stores (1.4%), and miscellaneous store retailers (1.4%).
Of note, according to Long, building material and garden equipment, as well as supplies dealers, were June's biggest losers (-0.9%), followed by general merchandise stores (-0.2%), and health and personal care stores (-0.1%).
Year-over-year growth in retail sales were up 8.5% in June. Control group sales – which excludes auto, gas, and building material categories – were up 6.5% from a year ago.
Strain on Households
“Households are straining to maintain their quality of life. The personal saving rate fell in April to its lowest point since 2009,” noted Long. “As pandemic savings evaporate, spending should slow further, and the recent uptick in revolving debt is likely to continue.
“For the Federal Reserve, this report is not enough to move the needle for any FOMC members that may have been considering a 100-basis point hike later this month,” continued Long. “The day’s other anticipated release was the University of Michigan’s consumer sentiment report, which showed a decline in inflation expectations. Taken together, the odds still favor a 75-basis point rate increase in two weeks’ time.”