The growth of retail sales is not as fast as forecasted

The U.S. Census Bureau has just released its monthly report on retail sales activity. Retail sales for July grew only 0.4 percent overall from June, and are up 5.5 percent since July of last year. This was below previous quotes. Economic indicators are pointing toward a slower recovery. Consumer prices also rebounded slightly after several months of slight decline. Consumer prices are being watched closely by economists, as many fear deflation due to increasing costs of goods and lower employment might be on the horizon.

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July of this year had a very modest improvement in retail spending. The figure of a 0.4 percent increase by the US Census Bureau could be somewhat misleading. Discretionary retail spending, for goods such as furniture or electronics, fell 0.42 percent between June and July. Discretionary spending, as outlined by the Christian Science Monitor, rose 2.77 percent from a year ago. Retail sales, according to the Wall Street Journal, had fallen the previous two months, as May sales were down 0.3 percent and June was 1.0 percent lower than May.

The modest gain was spurred by auto sales

The gains within the retail sales were helped along by car sales, confirmed by the profits that Ford and General Motors realized for this last quarter. The bulk of the retail sales increases, as outlined by Bloomberg, were due to sales of vehicles and the gas necessary to drive those new automobiles around. All other categories of retail sales combined for a loss of 0.1 percent. Consumer prices also ticked higher. The Consumer Price Index rose 0.3 percent, meaning the cost of living is increasing in an era of high unemployment.

Deflation becoming a worry

The restoration is going slower than people would like, and unemployment is nevertheless hovering around 10 percent. The Federal Reserve is at the moment looking for signs of deflation, which is where prices of goods increases when less cash is accessible to go around. Fewer individuals are fully employed, and less wealth is being held in housing. The indicators seem to point to cautious consumers, as less spending and more saving appear to be the orders of the day.

Discover more data on this topic

CS Monitor

csmonitor.com/Money/Paper-Economy/2010/0813/Retail-sales-up-in-July

Wall Street Journal

blogs.wsj.com/marketbeat/2010/08/13/price-retail-sales-data-arrive-in-line-with-expectations/

Bloomberg

bloomberg.com/news/2010-08-13/retail-sales-in-u-s-increased-0-4-in-july-less-than-economists-forecast.html