WASHINGTON — Americans spent more at retail stores and restaurants in July, a sign that concerns over weakening economic growth and a persistent trade war that have roiled financial markets have yet to dampen consumer confidence.
Retail sales rose a healthy 0.7% last month after a 0.3% gain in June, the Commerce Department said Thursday. Online retailers, grocery stores, clothing retailers and electronics and appliance stores all reported strong gains.
Consumer spending, the primary driver of the U.S. economy, appears healthy even as other sectors of the economy, such as business investment, have weakened amid growing uncertainty over the U.S.-China trade conflict. Job growth is steady, the unemployment rate is near a 50-year low, and wages are rising modestly, which bolsters Americans’ spending power.
“The consumer is playing Atlas, shouldering overall economic growth again in the third quarter,” said Diane Swonk, chief economist at Grant Thornton, a tax advisory firm. “The key is employment. That will ultimately determine how we weather the trade storm.”
Sales in a category that is mostly made up of online retailers jumped 2.8% last month, the largest increase since January. That figure likely was boosted by Amazon’s Prime Day sale for its members on July 15. Online sales have soared 16% in the past 12 months, compared to a 3.4% rise for overall retail sales.
Even department stores reported solid sales increases despite Wednesday’s anemic earnings report by Macy’s. Yet department store sales have declined over the past year. And Walmart, the world’s largest retailer, reported sales gains, lifted in part by brisk online grocery deliveries.
Thursday’s retail figures may allay some concerns about the potential for a recession that would end the 10-year U.S. recovery, the longest on record.
The stock market plunged Wednesday after bond yields flashed warning signs of a downturn, with the Dow Jones industrial average tumbling 800 points, or 3%.