Consumers pause in July
The Atlanta Fed's July retail survey showed some pullback, which several respondents attributed to an increase in political and economic uncertainty and recent market volatility. The full report will be released next week, but here are some highlights:
- The District Retail Survey showed that retail activity decelerated in July. The results however were very mixed, with 44 percent reporting an increase in sales and 41 percent reporting decreased sales. The majority of survey participants reported that inventory levels were up slightly in July.
- Firms were less optimistic about the coming three months. Of survey respondents, 52 percent expect an increase in sales over the next three months, decreasing from 62 percent in June.
Atlanta Fed President Dennis Lockhart shared his concerns about the effects of market volatility on consumer spending in his recent speech to the Florence, Ala., Rotary Club:
"I'm most concerned about the effect of the wild stock market on consumer spending. Volatility alone could have a negative impact on consumer psychology at a time of already weakening spending. Furthermore, if the loss of stock market value persists, the effect from the loss of investment value could combine with the loss of value in home prices to discourage consumers more and longer."
But he also noted that while the economy has slowed and consumer surveys show a pullback, recent data do not show that the economy is contracting or that the consumer is exiting altogether:
"Slow growth doesn't lock in a recession. In fact, some recent data we have on hand—retail sales and initial unemployment claims, for example—seem to contradict the direst predictions."
Importantly, despite the fact that the Atlanta Fed's Retail Survey showed that the outlook for sales over the next three months declined, retailers' outlook remained above May levels. In fact, about half of survey respondents expect an increase in sales over the next three months.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
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