July consumer spending stayed strong despite slowing growth

Consumers continued to increase their spending in July even as growth of the economy was moderating, according to an analysis of recent U.S. Census Bureau data by the National Retail Federation (NRF).

The Census Bureau said overall retail sales in July were up 1% seasonally adjusted month over month and up 2.7% unadjusted year over year. That compared with a decrease of 0.2% month over month and an increase of 2% year over year in June.

NRF adjusts that approach by using a definition of core retail sales that is based on the Census data but excluding automobile dealers, gasoline stations and restaurants. By that measure, July statistics were up 0.4% seasonally adjusted month over month and up 5.2% unadjusted year over year. Core retail sales were up 3.4% year-over-year for the first seven months of the year, in line with NRF’s forecast for 2024 retail sales to grow between 2.5% and 3.5% over 2023.

“July’s retail sale figures mirror the strength in the economy, which continues to expand even though there are pressures on growth. The midsummer boost from back-to-school and college spending along with special deal days offered by retailers clearly helped,” NRF Chief Economist Jack Kleinhenz said in a release.

The impact of summer shopping has been growing in recent years, driven by spending spikes like an early start to back-to-school buying and special deals offered by major retailers like Amazon and Walmart.

“Households are proceeding with measured spending and getting the benefit of falling retail prices despite still-elevated prices for services. Even with growth of the labor force cooling, consumer spending remains the backbone of the economy and is keeping the expansion on a positive path. We are all waiting to see what direction the Fed will take with interest rates,” Kleinhenz said.