The numbers: In July, sales at U.S. stores went up the most in fifteen months, but most of the increase was due to a rise in car sales after dealers recovered from a nationwide cyberattack on their computer systems.
The government said Thursday that sales went up by 1% last month. A poll of experts by the Wall Street Journal said they thought they would go up 0.3%.
Seasonally adjusted numbers showed that retail sales only went up 0.4% last month when cars were taken out of the equation. But sales for June were changed so that they showed a 0.2% drop instead of no change.
The overstated rise in sales in July doesn’t do much to dispel the idea that the economy has slowed down from the superfast pace it hit last year.
Households, especially those with lower wages, are under more stress because of high interest rates and years of very high inflation. It’s also harder to find work now because the job market has gotten worse.
Still, the fact that sales kept going up last month also shows that the economy isn’t in too much trouble. Gross domestic product, which is the official measure of growth, is expected to rise by around 3% in the third quarter.
Details: Sales of new cars and auto parts have been going up and down, but last month they went up 4%, which was the most since January 2023.
Criminals trying to get money from car dealers all over the country launched a nationwide cyberattack in June that stopped many sales from going through. A lot of those purchases were made in July instead.
Gas earnings stayed pretty much the same.
The rest of the store report had more good news than bad.
Big-box stores that sell gadgets, groceries, home improvement stores, and pharmacies did the best.
Last month, restaurant sales went up 0.3%, which was the fourth straight month of growth. When the economy is good and people are confident in their work, restaurant sales tend to go up.
It looks like Amazon AMZN 4.06% Prime Day didn’t add much to online sales, which went up by only 0.2%. But in June, sales went through the roof, up 2.2%.
Department shops, clothing stores, and stores that sell hobby and sports supplies all saw a drop in sales.
In general, households are under more worry about money, as shown by the fact that loan default rates are rising, though they are still very low. They need to spend more of their current pay, but incomes aren’t going up very quickly.
Still, steady spending is likely to be supported by a low jobless rate, and soon, the U.S. will have lower interest rates, which will make it cheaper for people to borrow money or buy big things like cars.
In the future: Michael Pearce, deputy lead U.S. economist at Oxford Economics, said, “The rise in headline retail sales in July was mostly due to the return of auto sales as the effects of the cyberattack faded.”
The details were not quite as strong, but they still support the idea that consumer spending rose at a strong 2% yearly rate in the third quarter.
