Retail sales for August totaled $732 billion, up 0.6 percent from July and 5 percent from last year. At first glance that looks like healthy growth, but these numbers are not adjusted for inflation. Once you factor in price changes, the real increase is much smaller, closer to 0.3 percent for the month and about 2.5 percent over the year. In other words, much of the reported growth comes from people paying higher prices rather than buying more goods. The strength that shows up in the headline is concentrated in a few areas, like online retailers which jumped more than ten percent annually, and restaurants and bars which rose six and a half percent. Consumers are still spending on convenience and experiences, but these categories are carrying the weight while much of the retail landscape is stagnating.
Weakness is spread across the rest of the report. Gasoline stations fell 3.2 percent in August and are down compared with last year. Furniture and home furnishings slipped, building material and garden suppliers dropped more than two percent from a year earlier, and department stores fell 2.7 percent in August and remain lower than last year. These categories are closely tied to housing, and the slowdown reflects the pressure of high mortgage rates and frozen housing turnover. Even the areas that managed gains barely kept pace with inflation: electronics rose 0.3 percent, food and beverage stores gained 0.3 percent in August and 3.2 percent over the year, and health and personal care stores slipped 0.1 percent. Department stores continue their long structural decline, which is more than just a retail story, it means job losses, weaker malls, and ripple effects in local economies.The control group, which strips out autos, gas, food services, and building materials and is used to calculate consumer spending in GDP, rose 0.7 percent in August and 5.4 percent from last year. Adjusted for inflation, those numbers translate into much thinner real gains. The story here is imbalance. Americans are spending more, but they aren’t buying more. The willingness to splurge on a dinner out or an Amazon order is being offset by cutbacks on housing-linked purchases and durable goods. Credit card balances are at record highs, savings rates are near historic lows, and the composition of spending is getting weaker even as the dollar amount rises. The headline says growth, but the details point to fragility.Source: StockMarket.News
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