US retail sales rise in August as wealthy Americans drive nearly half of all consumer spending
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The news: American consumers continued spending in August, pushing retail sales up 0.6% for a third consecutive month in a broad-based advance, according to US Commerce Department data.
The numbers: Nine out of 13 categories recorded increases, led by online retailers, clothing stores and sporting goods, likely reflecting back-to-school shopping. Sales excluding cars rose 0.7%, while control-group sales, a measure used to estimate GDP, also climbed 0.7%.
The context: The figures, which are not adjusted for inflation, suggest resilient demand even as tariffs raise the cost of some goods, consumer sentiment remains subdued, and the US labour market shows signs of faltering.
Economists said some of the increase in retail sales was driven by higher prices rather than stronger sales volumes, particularly in categories such as apparel and vehicles.
ING chief international economist James Knightley said the data “implies that retailer profits are being driven by price increases rather than consumers physically buying more items.”
Online sales rose 2% during the month, restaurant and bar spending increased 0.7%, and motor vehicle sales were up 0.5%. Other gains were recorded at food and beverage stores (+0.3%), sporting goods retailers (+0.8%), and electronics and appliance stores (+0.3%). Sales at furniture outlets fell 0.3%.
Meanwhile, analysis by Moody’s Analytics chief economist Mark Zandi of Federal Reserve data showed that US households in the top 10% of income earners accounted for 49.2% of total consumer spending in the June quarter, the highest share on record since 1989 and up from 48.5% in the March quarter.
“The economy’s prospects are tethered to the fortunes and spending of the well-to-do,” Zandi said. “If they turn more cautious in their spending, for whatever reason, the economy will suffer a recession.”
The data comes as the Federal Reserve meets this week, with policymakers widely expected to cut interest rates by a quarter of a percentage point to support the labour market.
The sources: US Census Bureau, Bloomberg, Reuters
