Americans are still spending at a healthy clip, despite worries about the economy. The Commerce Department reported on Tuesday that retail sales rose 0.6% in August, matching July's revised figure and surpassing economists' expectations, reports CNN. Economists polled by the Wall Street Journal expected a rise of 0.3%. Back-to-school shopping appeared to help, notes the Journal, with clothing and accessory sales up 1%, and sales at sporting goods stores, bookstores, and musical instrument shops up a similar amount. Excluding volatile auto sales, spending rose 0.7%, also above forecasts.
"This is further evidence that we shouldn't underestimate the strength of the consumer," wrote Bankrate senior industry analyst Ted Rossman, per the AP. "Back-to-school shopping was a key theme in August, as evidenced by the strong clothing and electronics sales." Still, the economic backdrop is showing cracks. Hiring has slowed, and June saw the first monthly job losses since late 2020, ending a historic run of job growth. Unemployment is inching up, with more job seekers than openings.
Consumer confidence also appears to be slipping, despite the rise in retail sales. The University of Michigan's index dropped unexpectedly this month, with the survey citing worries over trade policies—especially tariffs—as weighing on Americans. Many anticipate cutting back on spending, with the New York Fed reporting an expected slowdown in monthly spending growth. Meanwhile, the Federal Reserve is widely anticipated to cut interest rates this week, citing job market weakness as a driving factor.
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