It’s no secret that summer is flying past us. Here at The Spending Breakdown, we’ve been looking at retail results each month courtesy of the Census Bureau and finally caught up just in time to bring you some of the June result highlights.
Part of what appeals when examining the numbers is the story they tell about consumer behavior. That is: what are people buying and how much are they spending on it? The June numbers came out in mid-July, and if anything, they told us that consumers scaled way back and prioritized a great deal. Let’s take a closer look:
Total spending in June was flat, coming in at $704.3 billion, down slightly from $704.5 billion in May. Neil Saunders, Managing Director of GlobalData responded that June marked the “worst pace of growth since the start of the year.”
Saunders also noted that tax refunds have largely dried up, which likely “knocked almost a percentage point or so off growth compared to the prior month,” and that “banner holidays and events, such as Memorial Day have become increasingly important drivers of retail spending. They provide consumers with an excuse to splash out and for retailers to offer bargains and deals.”
Despite tightening consumer finances, a “crumb of comfort,” according to Saunders, comes from overall spending because it is still trending positively. Looking at the same period in 2019, he points out that sales are still up 35.8% higher than then. “Even with inflation,” he wrote, “[this] is exceptional growth over a short period of time.”
In his response commentary on the month’s results, Chip West, a consumer behavior expert with VeriCast, noted that the flat spending was something many had predicted. “Shoppers continue to weigh and prioritize around discretionary purchases they make,” he wrote. They “also remain on the lookout for deals, offers, and discounts.”
Loyalty has been tested by high prices, according to West, who also noted consumers have become “extremely less loyal” lately as a result.
Still, every month reveals where consumers were willing to spend versus where they weren’t. Notable categories that rose in total spend during June included the nest feathering department. Here, furniture and home furnishings increased slightly to $11.084 billion from $11.013 billion. Electronics and appliances rose to $7.863 billion from $7.830 billion, and building materials and garden supply stores increased to $40.675 billion from $40.112 billion.
Vehicles saw the lowest spending category-wise. Both motor vehicle parts and dealers and gasoline stations saw less spending. Consumers spent $130.7 billion on parts and dealers in June, down from $133.3 billion in May, while they spent $51.918 billion at gasoline stations in June, compared to $53.512 billion in May.
Gas stations “were a big drag on spending,” wrote Bill Adams of Comerica. “But lower spending at gas stations is good news for the broader economy. When consumers spend less to fill their gas tanks, that leaves more for spending on other goods and services.”
Consumers also shopped at the more traditional retail stores more in June. This is evidenced since clothing and accessories rose to $26.363 billion from $26.210 billion; general merchandise went to $75.719 billion from $75.283 billion, and department stores, a subcategory within general merchandise, also rose to $10.976 billion from $10.934 billion in May.
Similarly, food and beverage sales increased, rising ever so slightly to $82.674 billion from $82.626 billion, and food and drink establishments rose to $94.831 billion from $94.575 billion.
We also wanted to look and feel our best in June; health and personal care increased some to $36.544 billion from $36.226 billion.
“Consumers are pulling back on some items, but they still show signs of resilience,” wrote Jeffrey Roach of LPL Financial in response to the results.
July results are expected to come out on August 15. During this time period, July 4th, summer vacations, early back-to-school, Prime Day and its competitors and leisure time are among the spending events and items we will consider when those results are made public.
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