US consumer spending rose more than anticipated in July, according to government data released Tuesday, showing resilience even as the economy cools on the back of a boost from online spending.
Retail sales in the world’s biggest economy advanced 0.7 percent to $696.4 billion last month, up from a revised 0.3 percent rise in June, said the Commerce Department.
Consumption has proven more robust than expected in the United States as households dip into savings accumulated during the pandemic, supporting growth while business activity slowed in recent months.
Analysts noted that spending deals offered on Amazon Prime Day — which took place in July — likely buoyed consumer purchases online.
Official data released Tuesday showed that the overall increase came on the back of a 1.9 percent rise at nonstore retailers, while sales at restaurants and bars picked up 1.4 percent from June.
But sales at auto dealers dipped 0.3 percent from June to July, while that at gasoline stations picked up 0.4 percent.
“The bigger picture, though, is that consumption spending growth is slowing, albeit not collapsing,” said economists Ian Shepherdson and Kieran Clancy of Pantheon Macroeconomics in a recent report.
By giving a boost to its legendary store on 5th Avenue in New York, jeweler Tiffany wants to fuel the momentum driven by its new owner, the French luxury giant LVMH – Copyright ispace/AFP Handout
They noted that auto sales have come down slightly since January.
While there was a jump in the headline figure, economists have pointed out that consumers are drawing down on their excess savings while higher interest rates bite.
To ease demand and sustainably lower inflation, the Federal Reserve has raised rates rapidly in the past year, bringing them to the highest level since 2001 most recently.
“The restart of student loan repayments from October likely will worsen the downshift in spending growth,” said the Pantheon analysts.
Beyond retail spending, a separate report released Tuesday indicated that business activity declined in New York State in August, according to a manufacturing survey.
