The latest national report on retail sales showed consumers actually spent less in June compared to May. Since consumer spending is such an important part of the economy, is this bad news? Extension economist Mike Walden responds:
“Well, it is concerning news. … In fact there was a .5 percent decline in overall retail spending in June compared to May. And this is after taking out typical seasonal variations.
“I think what’s happening … is that last winter and the early part of this year, consumer spending at the retail level really jumped. I think this was when we were beginning to get some good news about the economy. I think consumers had recession fatigue, so they really wanted to enjoy themselves a little bit and go out and spend. And now I think consumers are coming back to earth. They still have to go through repaying their debt. Consumer debts are still high. Consumers actually are paying down on their debt, they are saving more. But that is going to squeeze spending.
“So I think we are probably looking at a more normal pattern of retail sales. That is to say they are going to be flat to slightly up.
“Now if you look behind the overall report, of course, you are always going to see differences. Consumers actually spent more last month at restaurants. They spent more on clothes, healthcare, and electronics. But they spent much, much less on vehicles — gasoline — which was due to a drop in prices; furniture; groceries; and sporting goods.”