Retail Sales: Day-to-Day Spending Stuck in Low Gear
For much of the second quarter, analysts insisted that strong consumer spending would boost economic growth in the second half of the year as earlier drags — from higher payroll taxes and decreases in government spending — worked their way through the system. But last month’s retail sales data put that assertion into question.
“The day-to-day spending habits of consumers just aren’t pushing into that next gear,” Jim Baird, chief investment officer at Plante Moran Financial Advisors, told The Wall Street Journal. “It’s hard to get to a significant pickup in growth without the consumer playing a significant role in that.”
“We have to see better job growth, better income growth” for consumer spending to improve, Wells Fargo Securities analyst Eugenio Aleman said following the Department of Commerce’s August retail sales report. The month’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. Analysts had expected retail sales to increase 0.5 percent, with help coming from back-to-school shopping.