U.S. consumers spent more at retail stores and restaurants in July, a sign that concerns over slower global growth that have roiled financial markets haven’t dampened consumer confidence.
The Commerce Department says retail sales rose a healthy 0.7% last month, after a 0.3% gain in June. Online retailers, grocery stores, clothing retailers and electronics and appliance stores all reported strong gains.
Consumer spending, the primary driver of the U.S. economy, remains healthy even as other sectors of the economy, such as business investment, have weakened amid growing uncertainty over the U.S.-China trade war. Job growth is steady, the unemployment rate is near a 50-year low, and wages are rising modestly, which bolsters Americans’ spending power.
Even department stores reported solid sales increases despite Wednesday’s anemic earnings report by Macy’s.
In emailed commentary, Avery Shenfeld, chief economist at CIBC Capital Markets, said that Americans have shown a “puzzling lack of reaction thus far” to troubling economic indicators.
“Apparently, American shoppers are unaware of what the yield curve slope is supposedly telling them about their economic fate,” Shenfeld wrote.
Taylor Rochwerg, a research analyst with CIBC Capital Markets, noted in a report that while retail sales “came in hot,” the negative U.S. industrial production data that was also released on Thursday “shows the US economy isn’t immune from a deceleration in global growth.”
“Put the two together, and this still looks like a deceleration rather than a recession story for the world’s largest economy,” Rochwerg wrote.