Downward Spiral In Retail Sales May Worry Investors, Fed
Zacks Investment Research | Jul 16, 2017 10:31PM ET
U.S. retail sales fell for the second straight month in June, reflecting a scenario where consumers are reining in their spending. This casts a doubt over the expected rebound in the economy during the second half of 2017. The dismal sales report overshadowed steady job additions and gradual wage acceleration. Fed officials definitely have their eyes on the latest developments in the economy and the recent event may influence their future action plan. For now, soft retail sales may compel investors to revisit their portfolio.
The Commerce Department stated that U.S. retail and food services sales in June declined 0.2% to $473.5 billion – following a revised reading of 0.1% decrease registered in May – as people curtailed their spending on clothes and spent less at gasoline stations, department stores and restaurants. However, retail sales increased 2.8% from Jun 2016.
The report states that sales at clothing & clothing accessories stores declined 0.1%, while receipts at gasoline stations fell 1.3%. Sales at food & beverage stores dropped 0.4%. Department store sales decreased 0.7% and were down 3.9% from the prior-year period. Sales at non-store retailers, however, inched up 0.4% in June and increased 9.2% from the prior-year period.
The abovementioned data strongly suggests that consumer spending, which plays a pivotal role in driving the economy, lost momentum. The Fed, which raised the benchmark interest rate in June for the second time in 2017, will certainly consider the retail sales report while contemplating an interest rate hike.
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