The numbers: Sales at U.S. retailers rebounded in June as Americans flocked to bars and restaurants and bought the latest summer fashions, pointing to an accelerating U.S. economy.
Sales had tumbled 1.7% in May.
Retail sales are now up 18% in the past year and easily exceed pre-pandemic levels.
The biggest change is what Americans are spending their money on. Households are still buying plenty of goods, but they have shifted their spending toward services they avoided during the pandemic. Dining out, entertainment, travel, vacation trips and so forth.
Take bars and restaurants, the only category in the monthly retail report that involves services. Sales jumped 2.3% in June, the government said Friday, and rose sharply for the fourth month in a row.
Through the first six months of 2021 receipts are up almost 38%.
Consumers also would have bought more new cars and trucks last month, but automakers can’t produce enough of them because of a shortage of computer chips. Semiconductors are now a critical component in modern vehicles.
Excluding autos, retail sales advanced 1.3% — almost three times as much as Wall Street expected.
Big picture: Most households have plenty of money to spend thanks to massive government stimulus payments, a rapidly recovering economy and a robust jobs market. There’s little likelihood spending will drop off soon so long as Covid cases remain low.
Strong household spending is expected to keep the economy humming through the end of the year. Consumer outlays account for about 70% of U.S. economic activity.
The one negative: Some of the increase in spending reflects higher inflation. The cost of living has jumped 5.4% in the past year — the fastest pace since 2008.
“Rising inflation also likely lifted total sales in June, especially at gasoline stations,” said senior economist Ben Ayers of Nationwide.
Americans are paying more for a variety of goods and services, but the Federal Reserve contends the trend toward higher prices is temporary. The reopening of the economy has led to a surge in pent-up demand that businesses are unable to satisfy all at once.
Key details: Grocers, apparel outlets, big-box electronics stores, department chains and Internet retailers all posted strong sales gains in June.
Internet sales got a boost from Amazon’s
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Sales also rose 2.5% at gas stations as Americans reverted to pre-pandemic driving patterns, but they are also paying more at the pump. Gas prices have risen sharply this year.
Sales fell at auto dealerships, home centers and stores that sell home furnishings.
Auto receipts declined 2% in June. Lots of people want to buy new or used cars, but prices have soared in light of a shortage of available vehicles. Auto purchases account for about one-fifth of all U.S. retail sales.
The high cost of lumber and scarcity of homes for sale, meanwhile, likely contributed to the weak results at stores that sell furnishings or materials for home-renovation projects.
What they are saying? “Consumer spending continues to boom,” said senior economist Bill Adams of PNC Financial Services. “June’s retail sales were up 19.8% from their level in February 2020, before the pandemic hit the U.S.”
Market reaction: The Dow Jones Industrial Average
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