July 16, 2021 Reading Time: 2 minutes

Retail sales and food-services spending rose 0.6 percent in June, the fourth gain in the last six months.  The results over the last six months leave retail sales at the third highest on record and well above the most recent nine-year trend (see first chart). From a year ago, total retail sales are up 18.0 percent.

Core retail sales, which exclude motor vehicle dealers and gasoline retailers, posted a 1.1 percent jump for the month, leaving that measure with a 15.8 percent gain from a year ago. Core retail sales are also up in four of the last six months, at the highest level on record, and well above the nine-year trend (see first chart).

Gains were generally broad-based in June (see second chart). The gains were led by a 3.4 percent increase in miscellaneous store retailers, followed by electronics and appliance stores (up 3.3 percent for June), clothing and accessory stores (a 2.6 percent rise), and gasoline stations (up 2.5 percent; see second chart).

Only four categories had declines in June. Furniture and home furnishings fell 3.6 percent, motor vehicles and parts dealers were down 2.0 percent, sporting goods, hobby, musical instruments and book stores lost 1.7 percent, and building material and garden equipment and supplies dealers were off 1.6 percent (see second chart).

Overall, retail sales posted a strong gain in June, marking the fourth gain in six months, leaving total and core retail sales well above trend and near record highs. Reopening the economy is supporting a rebound for the labor market and personal incomes, suggesting the economic outlook remains favorable. However, difficulty finding and retaining workers, logistical problems, and materials shortages are driving prices higher. The higher prices are starting to have an impact on consumer sentiment. However, a 1970s-style accelerating price spiral remains unlikely, and the overall economic outlook remains tilted to the upside.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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