Consumers are still spending, but the pace — at least as detailed in the latest retail sales report from the Census Bureau for August — is slowing.
And for the last full month of summer, perhaps to beat the heat, consumers stayed in and clicked the buy button.
It might be the case that consumers are allocating their funds toward digital deals as the summer months wane, and as back to school shopping got fully underway. In August, sales at non-store retailers — often used as a read-across for eCommerce — were up 1.4%.
For the month, and as measured against July, retail sales were up 0.1%, where the expectations had been for a 0.2% decline. The August reading represents a slowdown from the newly revised 1.1% growth rate seen in July (versus June).
The data released Tuesday (Sept. 17) offered up a headline number that beat expectations.
And though nothing about the report indicates that there is a full-scale pullback in the works, the overall takeaway from the report may be that consumers and households are a bit more wary about where they are putting their dollars.
Drilling down into the categories themselves, we see a scaling back in what might be termed discretionary spending, in the leisure activities and in-person shopping that have become synonymous with the post-pandemic economy.
Spending at gas stations slipped 1.2%.
The revision for July and the fact that sales were up in August will likely be enough to fan the flames for the Fed to cut interest rates — as soon as tomorrow — as has been widely expected. And stocks were up 0.4% on that sentiment at the start of trading on Tuesday morning.
But spending at grocery stores slipped 0.6% month on month, and sales at food and drinking establishments (read: restaurants) were flat in August. Spending at electronics and appliance stores was off by 1.1% in August, and consumers spent 0.7% less at clothing and apparel stores than had been seen in July.
Elsewhere, PYMNTS noted last week that the Consumer Price Index showed the cost of several “essential” categories surging month over month and on an annualized basis. Shelter was up 5.2% on an annualized basis, increasing from July. As measured on a month-over-month basis, the shelter index surged 0.5%, accelerating from the 0.4% pace seen in the June-to-July month-to-month reading.
Grocery prices were flat in August, measured month over month. That’s a reversion to recent trends, as previous months saw month-over-month increases of about 0.1% through the summer.
The measure of food consumed away from home was up to 0.3% as measured in August, up from July’s monthly 0.2% increase. On an annualized basis, the measure was up 4%. It makes sense that as inflation takes the restaurant tab higher, that we’d see a tempering of the desire to eat out with friends and family.
The chart below shows that, on an unadjusted basis (not adjusting for price changes), the post-pandemic surge to dine out has faced some real headwinds. There’s still growth, but as paychecks remain stretched, there’s arguably less money to spread around.
Indeed, as noted here, revolving debt hit roughly $1.4 trillion in July, which includes credit card debt, and that new tally is up 25% from pre-pandemic levels. Taking on that debt means taking on new monthly payments, which means that savings and spending power may be — and likely is being — pressured.
The online sales were a bright spot in a somewhat uneven report. September brings with it the promise of Labor Day sales, and perhaps there’ll be a reacceleration of willingness to spend at the registers — but the next report is a month away.
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