Consumers Splash Out in June

Retail sales jumped 0.4% in June after a modest downward revision for May. The data show consumers are willing to spend and even take on debt to do so. We are reaping the benefits of earlier mortgage refinancing, which is boosting take-home pay along with lower prices at the gas pump.

Core retail sales, which feed into the calculation of consumer spending for the GDP data, surged 0.7% for the month. Online spending posted some of the strongest gains. Consumers also loosened their wallets to step out and increase discretionary spending at restaurants and bars. That was despite a recent softening in consumer expectations.

The losers in retail remained traditional department stores, which lost 1.1% during the month and are off more than 5% from a year ago. Shifting consumer preferences for online continued to dominate demand over more traditional retailers.

Bottom Line
Consumers are spending despite concerns on the trade front. Real GDP growth now looks like it could come in at 2%, a slowdown from the first quarter, but still solid growth for the first half of the year.

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