Because they are the largest component of GDP, and the US economy is the largest in the world, US consumer spending is one of the most important figures in global markets. And despite expectations that they would soon run out of money or appetite for spending, US consumers just keep going strong.
US retail sales in August increased by 0.6% to a record $697.6 billion. Higher energy prices played a significant role, as gas station sales jumped by 5.2%. But even if you exclude autos and gas, which can be volatile over short-term periods, retail sales still rose by 0.2%. Most retail categories grew, including clothing, electronics, health and personal care, grocery, and restaurants and bars.
The American consumer remains resilient. By most measures, the August results beat economists’ expectations. In recent weeks and months, there have been a few signs that consumer finances may be getting more stretched. Excess savings have been dwindling and credit card balances have been on the rise. Yet spending keeps on going.
Source: US Census Bureau
It’s notable that patterns of spending continue to shift from goods to services. Consumers today love “experiences,” and they are now spending a lot more eating out and drinking out (red in the chart below) than they’re spending at food and beverage stores (green).
Source: Wolf Street
The gap between goods and services hit a new record of $8.4 billion in August (three-month moving average), which tells you something about what people are spending on. In 2019, for the first time, Americans spent more eating and drinking out than they spent at food and beverage stores. While this trend briefly reversed during the pandemic, when many restaurants and cafeterias were shut down, it has come back with a vengeance.
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