WASHINGTON (AP) — Americans spent more at retail stores and restaurants in July, a sign that concerns over weakening economic growth and a persistent trade war that have roiled financial markets have yet to dampen consumer confidence.
Retail sales rose a healthy 0.7% last month after a 0.3% gain in June, the Commerce Department said Thursday. Online retailers, grocery stores, clothing retailers and electronics and appliance stores all reported strong gains.
Consumer spending, the primary driver of the U.S. economy, appears healthy even as other sectors of the economy, such as business investment, have weakened amid growing uncertainty over the U.S.-China trade conflict. Job growth is steady, the unemployment rate is near a 50-year low, and wages are rising modestly, which bolsters Americans' spending power.
Even department stores reported solid sales increases despite Wednesday's anemic earnings report by Macy's. And Walmart, the world's largest retailer, reported sales gains, lifted in part by brisk online grocery deliveries.
Thursday's retail figures may allay some concerns about the potential for a recession that would end the 10-year U.S. recovery, the longest on record. The stock market plunged Wednesday after bond yields flashed warning signs of a downturn, with the Dow Jones industrial average tumbling 800 points, or 3%.
Worries about a recession have grown as President Donald Trump's trade war with China has intensified. Companies cut back on spending in the April-June quarter, contributing to a slowdown in annual growth from 3.1% in the first quarter to 2.1% in the second.
Still, most economists aren't forecasting recession, in part because consumer spending and the job market have remained strong.
Trump acknowledged this week that tariffs on Chinese imports could raise prices for American shoppers during the holiday season and delayed more than half his planned 10% tariffs on Chinese goods from Sept. 1 until Dec. 15. Trump cited the potential impact on holiday shopping as the reason for the delay.