Against the odds, Americans are still spending
Consumer spending remained in positive territory during the summer despite fears about the US economy.
By Bryan Mena, CNN
Washington (CNN) — Americans still opened their wallets last month, despite persistent fears about the economy, a slowing labor market and higher tariffs.
Spending at US retailers rose 0.6% in August, the Commerce Department said Tuesday, unchanged from July’s upwardly revised 0.6%. Last month’s figure came in much better than economists’ expectations of a 0.2% increase, according to a poll by data firm FactSet. Retail sales are adjusted for seasonal swings but not inflation.
Employers have hit the brakes on hiring in recent months as Americans once again grow pessimistic about the economy’s future. President Donald Trump’s widespread tariffs have also began to push up some prices, according to the Consumer Price Index.
Yet, US consumers haven’t cut back their spending meaningfully, and they may continue to spend so long as layoffs don’t surge.
Retail spending was up across most categories last month, with online sales and purchases at clothing stores rising the most, increasing 2% and 1%, respectively.
The so-called control group of retail sales — a measure that strips out volatile components — rose 0.74% in August, up from July’s 0.5% and well above economists’ expectations of a 0.4% increase.
Sales last month were down at specialty stores and furniture retailers, falling 1.1% and 0.3%, respectively. Spending at health shops and department stores were both down 0.1% each.
“The economy seems to be doing just fine for now and perhaps the slow-down in payroll jobs is one gigantic head fake when it comes to forecasting the economy,” wrote Christopher Rupkey, chief economist at Fwd Bonds, in an analyst note Tuesday. “Consumer spending is resilient. Interest rate cuts do not need to be adjusted as the economy is sailing along just fine.”
Spending at restaurants and bars rose 0.7% in August from the prior month, according to the report.
This story is developing and will be updated.
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