Retail sales, including food service, rose 1.2 percent in July from June, despite the increasing spread of the coronavirus in many parts of the U.S. Retail sales excluding autos rose 1.9 percent over the month, while sales excluding gasoline rose 0.9 percent. Sales excluding autos and gasoline were up 1.5 percent. Control sales-sales excluding food service, autos, gasoline, and home improvement stores, and which go into consumer spending in GDP-were up 1.5 percent in July.
Sales were revised higher in June (8.4 percent gain, revised up from 7.5 percent) and May (18.3 percent, from 18.2 percent). Total July sales were 1.7 percent above their February level, before the pandemic.
Sales were mixed across segments. Gasoline sales rose 6.2 percent over the month due to higher prices and more driving as people have started to venture out more. Sales at restaurants and bars rose 5.0 percent as people feel have felt more comfortable going out, despite rising coronavirus cases in many parts of the country. Sales at appliance and electronics stores jumped 22.9 percent in July as households are optimistic enough to make big purchases, fueled in part by stimulus payments. Sales at clothing and accessories stores rose 5.7 percent. But sales at specialty stores (sporting goods, hobbies, etc.) fell 5.0 percent over the month and sales at building materials stores dropped 2.9 percent, perhaps because consumers are spending less time at home.
On a year-ago basis retail sales were up 2.7 percent in July. This included year-over-year increases of 1.9 percent excluding autos, and 3.9 percent excluding autos and gasoline; gas prices were down 20 percent in July from a year earlier. Control sales were up 7.9 percent in July from a year earlier.
Consumers were spending over the summer, despite the increase in the number of cases of the coronavirus. Even with the unemployment rate above 10 percent, one-time stimulus payments for many households and expanded unemployment insurance benefits have allowed consumers to boost their purchases, with sales higher than they were before the pandemic. But bonus unemployment insurance payments of $600 per week expired at the end of July, and for many households this loss of income will require them to cut back on their spending. President Trump has attempted to restore some of those payments through an executive order, but it is unclear when they would restart and how many households they would reach. The loss of these payments will reduce household income by about $70 billion in August, and will weigh on consumer spending growth. Passage of a new economic stimulus program will be vital to ensuring a strong economic recovery in the U.S.
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