Online Shopping Gives the Economy A Lift
The American consumer is a big part of what has kept the economy expanding despite headwinds from abroad and a sluggish energy market.
Two reports that came out on Friday show the resiliency of this sector of the economy, which has given us some scares during the first quarter of the year.
First, the April retail sales report issued by the Census Bureau showed an overall gain of 1.3 percent in April over March. The gains were widespread, said Bob Hughes, senior research fellow at the American Institute for Economic Research.
We’ve seen a slowing gross domestic product in recent months, but these reports could bode well for second-quarter GDP, Hughes said. Only home supply stores showed a decline, he noted. Motor vehicles and parts were up by 3.2 percent. Also showing gains were furniture and home furnishings, and electronics and appliance stores.
Online shopping grew by 2.1 percent, while sales at brick-and-mortar general-merchandise stores were flat. Over the last 12 months, online shopping is up by 10.2 percent. “Consumer spending continues to move away from bricks and mortar to the Internet,” Hughes said.
AIER’s proprietary calculation of discretionary spending showed a 1.4 percent gain for the month.
Preliminary results for the University of Michigan consumer sentiment survey showed a very strong month after a few softer months, Hughes said. The overall number came in at 95.8 in May, up from 89 in April. Sentiment rose both for current conditions and expectations for future growth.
“The consumer does account for about two-thirds of GDP, which is the broadest measure of activity in the economy,” Hughes said. “When retail spending gets off to a strong start in the first month of a quarter, mathematically that’s a good sign.”
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