Cheaper borrowing costs, increased household wealth backed by rising home prices and stock market returns, and an improving job market have done much to sustain demand for big-ticket purchases like motor vehicles.
But retail sales figures released by the Department of Commerce on Monday showed consumer spending, which accounts for approximately 70 percent of the United States economy, may take some time to accelerate as Americans remain frugal to rebuild savings. While U.S. consumers spent more on gasoline and cars in June, they had little appetite for other goods, a problem because consumer spending has been the foundation for the economic recovery thus far.
Retail sales rose far less than expected, increasing 0.4 percent last month to a seasonally adjusted $422.79 billion. Economists expected a 0.8 percent jump to follow May’s 0.6 percent increase.
“The consumer was less engaged in the second quarter,” Ameriprise Financial senior economist Russell Price told Bloomberg. “The numbers are disappointing in comparison to expectations but the overall picture is still encouraging” given job growth and improved household balance sheets, he said.