CONSUMER SPENDING COULD SLOW DOWN DESPITE STRONG RETAIL SALES IN JULY

Retail sales were up 0.9 percent in July seasonally adjusted from June and up 5.6 percent unadjusted year-over-year, the National Retail Federation (NRF) said on Thursday. The numbers exclude automobile dealers, gasoline stations and restaurants.

The release of July’s numbers comes two days after the Trump administration delayed new tariffs on some consumer goods until December 15 to avoid any impact on holiday spending, but many products will still be hit by tariffs taking effect September 1 as scheduled.

As of July, the three-month moving average was up 3.5 percent over the same period a year ago, compared with 3.7 percent in June. July’s results build on gains of 0.6 percent month-over-month and 2.2 percent year-over-year seen in June.

Online and other non-store sales were up 19.3 percent year-over-year and up 2.8 percent month-over-month seasonally adjusted, likely boosted by Amazon’s Prime Day promotion, while clothing and clothing accessory stores were down 1.6 percent year-over-year but up 0.8 percent month-over-month seasonally adjusted.

“July’s strong results are consistent with a confident consumer,” said Jack Kleinhenz, chief economist at NRF. “Households are in good shape with spending and that should continue as long as the labor market remains healthy. But it’s important to remember that today’s data is looking backward at what was happening a month ago. The impact of volatile financial markets and increased trade tensions in recent weeks may put a wind of caution in consumer spending as we move forward in 2019.”

NRF’s numbers are based on data from the U.S. Census Bureau, which said today that overall July sales – including auto dealers, gas stations and restaurants – were up 0.7 percent seasonally adjusted from June and up 3.4 percent unadjusted year-over-year.