Consumers in the U.S. shrugged off the delta variant in August, delivering an unexpected gain in retail sales as a surge in online purchases helped offset continuing weakness in auto sales.
The Commerce Department reported Thursday that retail sales rose 0.7% last month after a revised decline of 1.8% in July. Economists had expected a 0.8% drop in August.
Sales rebounded even though purchases of motor vehicles fell 3.6% amid a global semiconductor shortage that has slowed production. Online retail sales surged 5.3% after tumbling 4.6% in July.”
“U.S. consumption is not slowing as quickly as it appeared a month ago despite the fading stimulus, and the delta variant did not much affect the industries feeding into retail sales,” said Chris Low, chief economist at FHN Financial in New York. “The economy continued to hum in August.”
“Delta? What Delta?” Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisers, said in a note to clients.
As CNBC reports, “Economists had expected that consumers cut back their activity as the delta variant continued its tear through the U.S. Persistent supply chain bottlenecks also were expected to hold back spending as in-demand goods were hard to find.”
But sales were strong in most categories during August, benefiting from back-to-school shopping and broader forces such as a historically high level of savings, strong job growth and rising wages. “Americans are sitting on at least $2.5 trillion in excess savings accumulated during the pandemic,” Reuters noted.
With many schools, college campuses and offices reopening, consumers spent more on groceries and merchandise at big-box stores last month. Sales at restaurants were flat but have climbed nearly 32% over the past year despite the pandemic.
Overall retail sales have increased 15.1% from a year ago and are 17.7% above their pre-pandemic level. The National Retail Federation said the increase reflects the continued strength of the American consumer and the resilience of the nation’s retailers.
“We maintain our confidence in the historic strength of consumers and fully expect a record year for retail sales and a strong holiday season for retailers,” NRF President Matthew Shay said.
Photo by Justin Sullivan/Getty Images
Commerce Department, consumer spending, Delta variant, retail sales, Supply Chain