The Commerce Department said Thursday that retail sales rose 0.2% in June, even as shoppers cut back on gas spending and kept a tighter grip on their money. The numbers show a familiar arrangement: households absorb the shocks, while the institutions that track the damage call it resilience.
Who Pays When Prices Move
Business at gas stations fell 5.3% last month as falling gas prices pulled down the overall retail sales figure, according to the report. The government figures aren’t adjusted for inflation, which means the lower bill at the pump helped mask the strain elsewhere. Outside of gas stations, retail sales rose 0.7%, but that still came after a revised 1% increase in May, a pace that looks less like abundance than people scrambling to keep up.
Sales at motor vehicle and parts dealers rose 1.9%, helped by aggressive manufacturers’ incentives, the report said. Elsewhere, shoppers were selective in their buying because of worries about the economy and fading benefits of generous government tax benefits that had propelled spending earlier in the spring. Clothing and accessories stores, along with miscellaneous retailers, both posted small declines. Furniture and home furnishings merchants were flat. Electronics and appliance stores showed only a small increase.
That’s the hierarchy in plain sight. The top-end incentives, the tax benefits, the price shifts, the official reports — all of it shapes what ordinary people can buy, when they can buy it, and what gets counted as strength.
What People Actually Did
Online sales rose 1.9%, fueled by spending around Amazon’s Prime Day event, which ran from June 23 through June 26. Business at sporting goods, hobby, musical instrument and book stores was up 1.3%, likely helped by spending around the World Cup tournament. The data offers only a snapshot of consumer spending and doesn’t include activities like travel and hotel stays. The lone services category in the report, restaurants, registered a slim 0.1% increase.
The so-called control group, which excludes food services, autos, building materials and gas station sales and is used to calculate economic growth, rose 0.5%. That figure matters because it feeds the machinery that turns household spending into a measure of national health, even when the people doing the spending are clearly being squeezed.
The Labor Department said Tuesday that consumer prices dropped 0.4% from May to June, the largest monthly drop in four years, after increasing 0.5% in the previous month. On a yearly basis, inflation declined to 3.5%, down from a year-over-year gain of 4.2% in May and lower than many economists expected. Gas prices fell to $3.94 per gallon on Thursday, down from $4.04 a month ago, according to motor club AAA.
What the Numbers Leave Out
Jim Baird, chief investment officer with Plante Moran Financial Advisors, wrote Thursday that “Falling fuel prices weighed on headline sales data, but a smaller bill at the pump was a source of relief for consumers and provided at least a little more cushion in household spending budgets.” He added that the June report suggests consumers are “perhaps taking a more discerning approach to where they’re spending and how they’re prioritizing their choices.”
Sara Williamson, a 27-year-old software support engineer in Raleigh, North Carolina, said she’s become more conscious of how she spends money over the last year or so. She said she feels financially secure because of her stable job, but increasing costs of food and gas are making her pull back on frivolous spending. “I shop less overall as a hobby,” she said. At the supermarket, she avoids buying pre-cut fruits like cantaloupe, which tend to be more expensive than buying the whole cantaloupe, and she’s careful about buying clothing for herself.
Brian Reynolds, CEO and founder of Just For Teens, a skincare collection aimed at preteens and teens, said his low-price products, including $5 pimple patches, are aimed at families on a budget and are in the sweet spot of retailing right now. By October, his brand will be expanded to 10,000 Dollar General stores, up from about 4,000 late last year. He said sales have been decent so far, but he expects more momentum for the back-to-school selling season. “There’s a lot of space for products that are everyday essentials that are value-priced,” he said.
A report last month from the Conference Board showed that Americans’ attitudes toward the economy improved slightly this month as gas prices declined, but their outlook is still mostly negative by historical standards. Next month, major retailers including Walmart, Target and Macy’s are slated to announce their second-quarter earnings results, which will offer some insight into shopping behavior. The whole setup keeps the focus on spending, earnings and market signals, while the people doing the buying keep adjusting their lives to fit the bill.