August Retail Sales: A Tale of Two Consumers
While retail sales have increased for four consecutive months, consumer spending figures have not been strong. The still stubbornly high unemployment rate, stagnant wages, and higher payroll taxes have kept consumers cautious, keeping purchases to their immediate needs.
When the Department of Commerce announced earlier this month that July retail sales increased just a meager 0.2 percent, economists saw that growth as a sign that consumers had spent cautiously that month and that the economy has remained relatively weak after a tough spring. That weakness was reflected in the quarterly results of many larger retailers, including Wal-Mart (NYSE:WMT), and in gross domestic product, which advanced just 1.7 percent in the second quarter with retail sales growing at a 1.8 percent annualized rate after increasing at a 2.3 percent pace in the first three months of the year.
Yet, economists are predicting the Commerce Department’s report on personal incomes and outlays, or spending, to show that personal incomes rose in the month of July — an indication that retail sales in the month of August will expand at a greater pace than they did in the previous month.