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Nominal retail sales ticked up by just 0.1 percent in August and sales edged down by 0.1 percent in real terms. Despite the August setback, real retail sales over the July-August span were still 3.3 percent annualized above Q2, suggesting that Q3 consumer spending growth will still be positive even if consumption momentum slowed over the course of the quarter. We project real GDP will grow by 0.8 percent annualized in Q3. Trusted Insights for What’s Ahead® Solid sales at healthcare and personal care, sporting goods, miscellaneous, and nonstore retail outfits were mostly offset by declines in sales at motor vehicle, furniture, building material, food and beverage, gasoline, clothing, and general merchandise stores, and at restaurants and bars. Nominal sales excluding motor vehicles and parts dealers also rose by 0.1 percent month-over-month in August. Retail control, defined as total sales excluding auto, building supply, gas station, and food services store sales rose by 0.3 percent month-over-month in nominal terms. After accounting for inflation, real retail sales dipped by 0.1 percent month-over-month in August. Still over the July-August span, real retail sales were 3.3 percent annualized above Q2 real sales, which decline by 1 percent annualized. The pullback in August retail sales notwithstanding, the surge in July spending on goods, bars, and restaurants still points to a healthy gain in real consumer spending in the third quarter. However, if September sales are also weak or down, that development would provide negative momentum for spending heading into Q4. We project that real consumer spending will increase by 2.0 percent annualized in Q3 2024 but decelerate to 1.6 percent annualized in Q4 2024. Overall real GDP may expand by 0.8 percent annualized in Q3 and 1.0 percent annualized in Q4 (see US Economic Forecast).
Report Highlights
Nominal retail sales rose by just 0.1 percent month-over-month in August following an outsized and upwardly revised 1.1 percent increase in July.
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