Washington.- Americans increased their retail spending in July by the most in a year and a half, easing concerns that the economy may be weakening due to inflation and high interest rates.
The Commerce Department reported today that retail sales rose 1% from June to July, the largest such increase since January 2023, after declining slightly the previous month. Auto dealers, electronics and appliance stores, and grocery stores all reported strong sales gains.
Retail sales data for July provided reassurance that the U.S. economy, while slowing under pressure from high interest rates, remains resilient. This shows that American consumers, the main driver of economic growth, are still willing to spend.
The prospect of a still-growing economy will likely be promoted by Vice President Kamala Harris’s presidential campaign. On Wednesday, her opponent, former President Donald Trump, criticized the economic record of the Joe Biden-Harris administration, even as he vastly inflated cost increases in food and mortgages.
As Americans spend more, economists at Morgan Stanley have raised their forecast for growth in the July-September quarter to a 2.3% annual rate, from a previous estimate of 2.1%. The economy expanded at a healthy 2.8% rate in the April-June quarter.
Overall, the latest data are consistent with an economy headed for a “soft landing,” in which the Federal Reserve raises interest rates enough to cool inflation but not so much as to cause a recession.
Adjusted for inflation, sales rose 0.8% last month. And excluding sales at the pump, which don’t reflect Americans’ appetite for spending, retail purchases also rose 1%.
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