The latest data on retail sales suggest that U.S. consumers are fairly upbeat in their spending habits despite stock market woes and global economic headwinds that have plagued international economies in recent weeks.
The U.S. Department of Commerce said on Tuesday that U.S. retail and food-services sales rose 0.2 percent month-on-month in August and 2.2 percent year-over-year.
The stats, experts say, indicate strength in consumer spending — though the trend is not consistent across all categories.
While consumer confidence may be bolstered by a lower jobless rate — hovering at just above 5 percent — and lower gas prices, a report by Cowen & Co.’s retail team says shoppers continue to exhibit “selective buying habits.”
“We acknowledge recently reported department store comps at Macy’s (down 2.1 percent) and Kohl’s (up 0.1 percent), combined with persistent lagging mall traffic trends and U.S. tourism headwinds as potential retail headwinds,” the report said. “Also, strength in consumer [spending] may not be directly flowing through to retail given preference towards restaurants, experiences, health care and electronics.”
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Still, market watchers believe the continued upward trend in consumer retail spending — with auto sales and dining showing significant strength — is a sign that consumers are healing from the financial crisis of 2008.
Diane Swonk, chief economist at Mesirow Financial Holdings Inc., noted that sales gains were also “decent” at discount and apparel stores.
“[The] increases were particularly impressive since discount and apparel stores are seeing some of the greatest downward pressure on prices in response to the strong dollar,” Swonk wrote on Sept. 15. “Inflation-adjusted spending in those categories is likely to be more encouraging than the nominal reading on retail sales alone.”
Experts say the improvements may further encourage the Fed as it weighs an interest rate hike during the closely watched two-day Federal Open Market Committee meeting Sept. 16-17.
It has been nine years since the Fed last raised its benchmark interest rate.