Retail sales ticked up 0.6 percent in August from July as consumers were forced to pay more for heating oil, gasoline, and diesel fuel. Wholesale prices for gasoline leaped up 20 percent, year on year, jet fuel 23.6 percent, and diesel 41.1 percent.
Higher fuel costs embed themselves throughout the economy, raising the risk of wide-scale higher inflation.
Producer prices, the broader measure of what manufacturers charge wholesalers and other businesses, gained 0.7 percent.
Outside of fuel purchases, shoppers raised by 0.2 percent the number of dollars they spent at restaurants, brick-and-mortar stores, and online. Thanks to higher jet fuel costs, airline fares went up 4.9 percent.
Spending on services also continued to increase, The Wall Street Journal reported.
Consumers’ willingness to continue to spend, even draining their savings and maxing out their plastic cards to do so, is contributing to what S&P Global Intelligence predicts will be a 3.9-percent economic expansion in this quarter. Second-quarter GDP growth came in at 2.1 percent.
TRENDPOST: Government reports of consumer spending state the volume of dollars spent but fail to adjust the numbers to accommodate inflation.
Retail sales edged up 0.6 percent in August, but so did inflation. Taken together, the two figures erase each other.
TREND FORECAST: Consumer spending supported 68 percent of the U.S. economy in this year’s first quarter. However, that cannot continue indefinitely: American shoppers have drained their post-COVID savings and have piled $1 trillion in debt onto their credit cards. (See “Americans Drain Their Savings to Keep Spending” 11 Oct, 2022, and “U.S. Consumers Continue to Pile Up Huge Credit Card Debts” in this issue.)
Already, the volume of things U.S. shoppers are buying has been slipping; through June of this year, the value of the goods and services Americans bought was less than the value that inflation subtracted from their incomes.
Retailers are expecting a weak holiday season. That would set the stage for a recession next year. Indeed, according to a report by Challenger, Gray & Christmas provided exclusively to Reuters, “U.S. retailers will hire the lowest number of seasonal workers for this holiday season since 2008, due to increased labor costs and shaky consumer confidence.”