Government Support Fuels Consumer Spending
This morning, the retail sales report topped forecasts for the second straight month. The +7.5% June increase followed a revised +18.2% record gain in May. Spending was positive in 10 of 13 categories with clothing sales up more than 100% month-over-month, while sales of furniture and electronics climbed 33% and 37% respectively. Auto sales and parts rose +8.2% as people opted for private vehicles over public transportation. Spending in grocery stores retreated -1.6% as more and more Americans cautiously began returning to restaurants last month. One of the more interesting things of note is that overall retail sales were actually higher in June 2020 than in June 2019. However, the trend is likely to be short-lived unless Congress is willing to extend the generous federal unemployment benefits that have helped fuel the recent surge in purchases.