US Retail Sales: Details offer the latest evidence of the V-shape recovery in consumer goods spending – Wells Fargo

In July, retail sales in the US rose 1.2%, below expectations. Analysts at Wells Fargo, point out that despite a headline miss, underlying details in were better than expected and prior data was revised higher. They consider services spending may remain under pressure, but see that retail sales activity has fully recovered.

Key Quotes: 

“Retail sales missed on the headline expectation, but only because categories that have been doing well gave up gains. Underlying components actually did much better than expected.”

“The details of today’s retail sales report offer the latest evidence of the V-shape recovery in consumer goods spending. Keep in mind that for the overall economy, outlays on services are roughly twice as large as goods and the recovery in services has been slower.”

“But these figures for July put the aggregate level of retail sales 1.2% above the pre-recession peak set in January. For consumer goods spending, the recovery is over—spending levels are back to record highs. The question now is to what extent those gains may prove fleeting as generous jobless benefits fade and as spending eventually shifts back into service categories. While overall retail sales pushed forward, some retailers saw sales give back some of their recent gains.”