Strength in Numbers
Retail data has oftentimes been the counter-data for inflation over the past few months, as a lack of consumer confidence is the nail in the coffin. While inflation has been rising recently, past months have shown that consumers are continuing to spend at retail stores, which has given some economists hope.
This trend continued, although at a slower pace, so confidence remains. Retail sales rose by 0.3% in August, and this can be attributed to strong back-to-school spending from families across the country. Despite incomes falling, families found more money to spend as things like gas prices fell. Necessities like food continue to see large volume despite rising prices there, but consumer sentiment continues to shift away from inflation. The monthly University of Michigan survey showed that expectations of the economy are becoming more positive and inflation concerns are slowly decreasing. However, the slow pace is something to be concerned about as it’s a sign inflation could be getting the leg up. All expectations point to the Fed rapidly increasing interest rates for the rest of the year, and this could limit the amount of money consumers are willing to spend. Considering those won’t have an immediate impact on inflation, this metric could start to weaken in the next few months, making this something you should keep an eye on.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
