July Retail Sales: A Mixed Bagby Tim Manni
Total Retail Sales declined 0.1% in July, the first monthly decline recorded in five months by the Commerce Department. Gas sales increased 0.8% in July, fueled not by increased demand but by surging prices. The cost of imported petroleum products rose by four percent in July, causing the price of oil to peak at over $147 a barrel. Excluding gas sales, retail sales dropped 0.2% for the month.
The decline in retail sales for July is largely blamed on the worst sales month Detroit automakers have experienced in 16 years. Vehicle and auto parts sales declined 2.4% in July, down 10.5% from a year ago.
June’s retail sales, however, were revised upward from 0.1% to 0.3%, which suggests July’s numbers may be better than the initial reports.
Unless the billions of dollars of stimulus checks are spent later in the year, they did not provide the spending surge law makers hoped:
Studies have shown that so far about only 20 percent of the stimulus checks have been spent with consumers choosing to save much of the rest of the payments. The administration argues that the checks will get spent in coming months, helping to lift economic activity for the rest of the year.
Until prices begin to deflate in a consistent manner, and unemployment stabilizes, consumers will continue to limit their spending. Americans continued to limit their driving in July, a trend that may turnaround if August’s prices keep dropping.