Resilient American consumers kept purchasing retail goods in August despite the pocketbook pressure of rising prices and interest rates, the National Retail Federation (NRF) said today.
The latest statistics show that overall retail sales in August were up 0.3% from July and up 9.1% year over year. That compared with a month-over-month decline of 0.4% and a year-over-year increase of 10.1% in July, according to U.S. Census Bureau numbers.
By another measure, NRF’s own calculation of retail sales – which excludes automobile dealers, gasoline stations, and restaurants to focus on core retail – showed August was up 0.1% from July and up 8% unadjusted year over year. In July, sales were up 0.5% month over month and up 7.2% year over year.
Either way, the news showed that household spending remained steady even as costs continue to rise, NRF Chief Economist Jack Kleinhenz said. But he cautioned that shoppers could eventually hit a limit and begin to scale back their buying patterns. “Consumers continuing to spend more each month points to the benefits of strong job and wage growth and their use of pandemic savings to help handle persistent elevated prices,” Kleinhenz said in a release. “Consumers are showing their toughness, but they have limited options and cannot continue if prices do not begin to soften. This retail sales report comes amid mixed signals from the broader economy that show the headwinds against the consumer are strengthening.”
And consumers dodged a bullet yesterday that could have added even more velocity to those headwinds, when rail companies and labor union leaders worked with the White House to craft a tentative deal to avoid a crippling freight rail strike.
“We are relieved and cautiously optimistic that the potentially devastating rail strike has been averted, and we appreciate the Biden administration’s intervention on behalf of businesses and consumers. We hope railway workers will accept the new terms of the proposed contract,” NRF President and CEO Matthew Shay said in a release.
Altogether, those variables have helped create a confusing mix for economic forecasters as the nation nears its first post-pandemic winter holiday peak season.
“August retail sales show consumers’ resiliency to spend on household priorities despite persistent inflation and rising interest rates. As we gear up for the holiday season, consumers are seeking value to make their dollars stretch,” Shay said. “Retailers have been hard at work managing their supply chains and holiday inventories to provide consumers with great products, competitive prices, and convenience at every opportunity.”