What to Expect from This Week’s Closely Watched Retail Sales Report

Economists expect that data to be released Thursday will show retail sales moved higher again in July. However, the post-pandemic spending spree may be close to an end.

Retail sales likely increased 0.3% in July versus the month before, according to economists surveyed by the Wall Street Journal and Dow Jones Newswires. That increase would follow better-than-expected figures the month before that showed consumers maintained their spending habits.

Strong retail sales have helped power the economy’s unexpected growth, as shoppers spent their way past projections that the U.S. would fall into a recession last year. And so far in 2024, retail sales have remained generally robust, though some economists think a slowdown is coming. 

Weaker Job Market Could Be A Drag on Spending

Weakness in the job market and the reliance of customers on credit has some economists asking if shoppers can sustain their spending habits.

“The lackluster pace of hiring in July, combined with other labor market indicators continuing to weaken, implies weaker income growth, which will eventually weigh on consumer spending,”  wrote Wells Fargo economists Tim Quinlan, Shannon Seery Grein and Jeremiah Kohl.

Auto Sales Will Likely Boost Totals, While Gas Receipts Expected to Shrink

Auto sales likely boosted the overall retail sales figure in July, after a cyberattack disrupted sales in the prior month. Meanwhile, gasoline sales are expected to have declined for a third consecutive month, as gas prices have remained subdued through most of the summer.

Another factor driving sales could be Amazon’s Prime Day, which happened in mid-July and often spurs competing sales. Adobe Analytics estimated that this year Americans spent more than $14.2 billion at online retailers during the two-day sale.

“Our forecast reflects a boost from another record Amazon Prime Day but sequentially slower credit card spending growth and a potential headwind from seasonality,” wrote Goldman Sachs analysts.