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Robust Consumer Spending Boosts U.S. Economic Growth
Retail sales rose 0.5% in June from the prior month, according to numbers released by the Commerce Department this week. The increase, which is being driven by robust consumer spending, is also having a positive impact on the overall economy.
The increase in June sales followed a revised (and improved) report for May, which jumped to 1.3% from an earlier report of 0.8%. Consumer spending accounts for more than two-thirds of U.S. economic output.
The numbers were led by vehicle sales and higher gas prices, while spending at health and personal-care stores experienced the largest monthly margin gain in more than 14 years. One of the gloomier areas was department store sales, which fell 1.8%. That marked the largest decline in more than two years, as online competition continues to erode department store sales.
Tax cuts and a low unemployment rate appear to be key factors contributing to robust consumer demand, though it is uncertain what effect the recent tariffs and trade actions by the U.S. and China will have on the economy. Consumers could be faced with higher prices or businesses could be forced to absorb price increases, which would trim profit margins.
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