Are Car Sales the Only Driver of Retail Sales Growth?
“The consumer continues to tag along slowly but surely,” Wells Fargo Securities analyst Eugenio Aleman told Bloomberg, following the Department of Commerce’s retail sales report. “We have to see better job growth, better income growth” for consumer spending to improve.
While pent up demand for big-ticket items like homes and automobile have helped strengthen the housing market and given a small boost to monthly retail sales figures for much of the year, as long as the labor market improves only modestly and growth in incomes and wages remains relatively stagnant — as it has since the end of the recession — many American consumers will continue to be in a difficult position. If American consumers are in difficult position, so is the economy — consumer spending accounts for approximately 70 percent of gross domestic product. Since government and business spending have remained weak, the economy is depending even more on household spending to fuel growth.
August’s retail sales growth put the struggles of the American consumer back in the spotlight, rising less than analysts had forecast. The 0.2 percent increase was the smallest gain in four months and followed an upwardly revised 0.4 July increase. Even worse, excluding motor vehicles, sales rose an anemic 0.1 percent after increasing 0.6 percent in July. Analysts had expected retail sales to increase 0.5 percent with help coming from back-to-school shopping.