The numbers: Sales at U.S. retailers rose a mild 0.3% in August as Americans spent more on new cars and trucks and went out to eat more, suggesting the economy grew at at a steady if slow pace toward the end of the summer.
Retail sales are a big part of consumer spending and offer clues on the strength of the economy.
The amount of money Americans are spending is still quite high, but it largely reflects the higher prices they are paying because of soaring inflation. Adjusted for inflation, retail spending has basically been flat for the past year.
Retail sales were forecast to be unchanged in August, according to economists polled by The Wall Street Journal.
Yet the modest increase in sales didn’t look as good in light of government revisions showing that receipts actually fell 0.4% in July instead of being flat as first reported. The decline in sales in July was the first in seven months.
Big picture: Retailers are basically treading water. They are selling roughly the same amount of goods and services as they were a year earlier after inflation is factored in.
The U.S. economy as a whole is faring somewhat better, with growth forecast to accelerate in the third quarter running from July through September.
Yet the economy faces a potential rough patch — perhaps even a recession — as the calendar turns toward 2023, with the Federal Reserve raising interest rates to try to douse high inflation.
Key details: Auto and parts sales rose 2.8% last month, confounding Wall Street expectations of a decline.
The total number of cars sold in August declined, auto dealers have reported, but the government sales figures are calculated differently.
Receipts at gas stations sank 4.2%, as prices fell toward the lowest level since the start of the the year and continued to decline in September. That’s good news for consumers, however, who are spending less on fuel.
Setting aside sales at gas stations and auto dealers, retail sales rose 0.3% last month, which provides a better picture of retail-sales trends.
One category that economists watch closely is bars and restaurants, the only service-providing category in the retail report. Restaurant sales rose 1.1% last month, partly reflecting higher inflation-fueled prices but also stronger demand.
Restaurant sales tend to rise when the economy is healthy and Americans feel secure in their jobs. Sales usually flatten out or decline in more troublesome times.
Sales also rose at home centers, grocers and clothing stores. Receipts fell at stores that sell home furnishings, electronics, appliances and health-care products.
Sales also declined at Internet retailers, as they often do following the month in which Amazon AMZN,
Looking ahead: “Retail sales were slightly better than expected in August,” said chief U.S. economist Rubeela Farooqi of High Frequency Economics. “However, households face headwinds from elevated inflation that is not yet showing any significant sign of abating.”