July Retail Sales Offer Hope for Improving Economy [AUDIO]
Following three months of declines, nationwide retail sales jumped in July by the largest amount in five months. Consumers spent 0.8 percent more from June to July; every major retail category experienced a spike. The better-than-expected report triggered a glimmer of hope for the weak U.S. economy.
"There's life for the consumer out there," said Jack Kleinhenz, chief economist with the National Retail Federation. "Consumers are in a position to open up their wallets and feel confident about spending."
Perhaps American consumers have been following the recent economic improvements, and acting on them. Consumer confidence rose in July for the first time in months, as employers provided the best month for job growth since February, and home prices ticked up.
Kleinhenz explained, "I think it kind of confirms that the underlying economy still has strength." He said growth, unfortunately, is just moving at a slower pace than expected when the recovery began.
Confidence from the consumer may be the traction needed for further growth. Back-to-school spending started late last month and continues through August. For that reason, August numbers should be another round of positivity. Outside of the winter holidays, back-to-school spending is the next-largest season for household spending.
"There's expenditures for books, for clothing...and this includes not only elementary and high school, but also back-to-school preparation that goes on for college kids," explained Kleinhenz.
Beyond August, holiday spending kicks in, and modest growth is predicted through the fall and winter.
Consumer spending accounts for an estimated 70 percent of economic activity, which is why economists consider the measure a solid gauge of the current state of the economy.