ARLINGTON, Va.—Total retail sales stayed flat in July following an increase of 0.8% in June, new federal data show.
“This marks the slowest growth during any single month since December 2021,” said NAFCU Chief Economist and Vice President of Research Curt Long noted. “Much of the weakness was concentrated in autos and gas stations; excluding those categories, sales rose 0.7% on the month.”
Sectoral performance was mixed in July, with nonstore retailers seeing the biggest increase (+2.7%), followed by both miscellaneous store retailers and building material and garden equipment and supplies dealers (+1.5%), according to the new federal numbers.
Growth Offsets
That growth was offset by declining sales at gasoline stations (-1.8%), followed by motor vehicle and parts dealers (-1.6%), general merchandise stores (-0.7%), and clothing and clothing accessories stores (-0.6%).
Year-over-year growth in retail sales were up 10% in July. Control group sales – which excludes auto gas, and building material categories – were up 8.5% from a year ago, the federal government stated.
“The flat measure for spending coincides with July’s consumer price index (CPI) reading, which was also unchanged,” noted Long. “That represents the third consecutive month that nominal retail sales growth has been at or below inflation, as measured by CPI.
Supply Issues
“Supply issues persist, but the decline in real spending is fundamentally necessary to slowing down the overheated economy,” added Long. “That it has not yet resulted in a severe downturn in the labor market raises hope that the Federal Reserve can achieve a soft landing. However, there is still lots of work to be done to get inflation near the Fed’s target, and financial conditions have eased recently.”
Long continues to forecast the Federal Open Market Committee will increase rates by 75 basis points at its September meeting.”
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