The report on retail sales for July has just been released by the US Census Bureau. Since July of 2009, retail sales have grown 5.5 percent, but only by 0.4 percent since June of this year. The increase was less than projected. This, along with other economic data would indicate that restoration is going to be a slow process. Consumer prices also rebounded slightly after a number of months of slight decline. Economists are closely watching consumer prices, as increasing prices in a period of lower employment and lower wages is what means deflation has arrived.
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Retail sales for July saw a slight increase. The figure of a 0.4 percent increase by the US Census Bureau could be somewhat misleading. There was a 0.42 percent drop in discretionary spending, on things for instance appliances, furniture and so forth, fell 0.42 percent for the month of July. Discretionary spending is up 2.77 percent from a year ago, as outlined by the Christian Science Monitor. Retail sales had fallen the previous two months, as May retail sales were down 0.3 percent from April, and June sales slid a further 1.0 percent, according to the Wall Street Journal.
The modest gain was spurred by auto sales
Ford and General Motors are returning to making profits, which accounts for a boost of auto sales in the retail sales figures. The increase within the retail sales were from vehicles and naturally, gas, according to Bloomberg. All other categories of retail sales combined for a loss of 0.1 percent. Consumer prices also ticked higher. The Consumer Price Index rose 0.3 percent, meaning the cost of living is increasing in an era of high unemployment.
Keeping an eye out for deflation
The restoration is going slower than people would like, and unemployment is nevertheless hovering around 10 percent. Deflation, which the Federal Reserve and others are seeking to keep from happening, is where less money is floating around in the economy but goods start costing more. Fewer people are fully employed, and less wealth is being held in housing. Overall conditions, including an increased savings rate, indicate trepidation of consumers to spend on larger items.
Additional information at these websites
CS Monitor
csmonitor.com/Money/Paper-Economy/2010/0813/Retail-sales-up-in-July
Wall Street Journal
blogs.wsj.com/marketbeat/2010/08/13/price-retail-sales-data-arrive-in-line-with-expectations/
Bloomberg
bloomberg.com/news/2010-08-13/retail-sales-in-u-s-increased-0-4-in-july-less-than-economists-forecast.html
