US retail sales see surprise bounce in August
Sep 16, 2022 - 07:45 AM
WASHINGTON — US consumers buying cars and going to restaurants and bars in August drove a surprise bounce in retail sales, even as spending on gasoline fell as prices at the pump dropped, according to government data Thursday.
Americans flush with savings have been a key driver of the US pandemic recovery and the Federal Reserve is keeping a careful eye on economic data as it battles to quash red-hot inflation without tipping the world’s largest economy into recession.
Retail sales last month rose 0.3 percent compared to July, to $683.3 billion, the Commerce Department said.
But while the headline gain was much better than the flat result economists had projected, the figure for July was revised down to show a 0.4 percent drop, so the August increase means the total remains below the level in June.
The 3.0 percent jump in auto sales was the main factor behind the increase, and when that segment is excluded, retail sales would have declined 0.3 percent, according to the report.
Gasoline stations saw sales drop 4.2 percent following weeks of declining energy costs.
US gas prices at the pump soared in the wake of the Russian invasion of Ukraine in late February, but in recent weeks have been trending down and have fallen by more than $1 a gallon after hitting an all-time high of over $5 in mid-June, squeezing family budgets.
Meanwhile, restaurants and bars rose 1.1 percent, as did building supplies, the report said, but online sales fell.
“Households continue to spend, supported by strong job growth and rising nominal incomes. However, households face headwinds from elevated inflation that is not yet showing any significant sign of abating,” said Rubeela Farooqi of High Frequency Economics.
The data are seasonally adjusted but do not take into account changes in prices, so as costs rise, a shopping dollar does not stretch as far and American families have had to use more of their earnings on staple goods.
The latest consumer price data showing widespread inflation has solidified expectations that the Federal Reserve will announce a third consecutive three-quarter-point interest rate increase at its policy meeting next week.
The central bank has raised the benchmark borrowing rate four times this year, including two massive three-quarter point increases in June and July after US annual inflation spiked to 9.1 percent in June.
While the annual pace slowed to 8.3 percent in August, Fed officials have made it clear they will continue to hike borrowing costs until inflation moves down.