US consumer spend slow but steady amid inflation, high-interest rates

Matthew Shay, president and CEO of the National Retail Federation (NRF) shares that consumers are focused on household priorities as evidenced by spending this back-to-school season, a trend which he believes will continue growing "moderately" entering fall despite uncertainties like inflation and higher interest rates.

Shemona Safaya

According to NRF, retail sales rose in August as parents shopped for school supplies and other goods even as inflation continued and interest rates remained high.

This follows September’s NRF Monthly Economic Review, where chief economist Jack Kleinhenz observed that while the economy is indeed decelerating, it is not coming to a standstill.

August sales were up in five out of nine retail categories on a yearly basis, led by health and personal care stores, online sales and clothing and accessory stores, and up in all but two categories on a monthly basis. Specifics from key sectors include:

  • Clothing and clothing accessory stores were up 0.9% month over month seasonally adjusted and up 3.6% unadjusted year over year.
  • Online and other non-store sales were unchanged month over month seasonally adjusted but up 7.6% unadjusted year over year.

Kleinhenz says NRF’s numbers show the pace of retail growth cooled from July but that consumers are still active even as they continue to be selective and price-sensitive.

He adds: “Households have the capacity to spend, but momentum is slowing, in part because savings built up during the pandemic are running lower and credit costs are rising. Consumer spending growth has slowed but there is little hint of any sudden collapse.”

The U.S. Census Bureau says overall retail sales in August were up 0.6% from July and up 2.5% year over year. That compared with increases of 0.5% month over month and 2.6% year over year in July.

While, NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – showed August was up 0.1% seasonally adjusted from July and up 3.3% unadjusted year over year.

In July, sales were up 0.7% month over month and also up 3.3% year over year.

NRF’s numbers were up 3.2% unadjusted year over year on a three-month moving average as of August and up 3.8% for the first eight months of the year.

Earlier in June, Kleinhenz pointed out that although the economic indicators are giving conflicting signs, the US should be headed toward a soft landing from the rampant inflation and high-interest rates of the past two years.

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