US Retail Sales 2014 Remain Flat: July Sales Weakest in Six Months as Analysts Blame Consumers Frugality
Retail sales in July were the worst in six months, according to the U.S. Department of Commerce.
The Commerce Department's Census Bureau announced retail and food services sales for July were $439.8 billion, "virtually unchanged" from June's data. In comparison to July 2013, retail and food services sales in July 2014 are up 3.7 percent.
The July figures revealed most Americans spent their money on food and clothing rather than automobiles and in department stores. When not including automobile sales, the retail sales increased by 0.1 percent in July.
The Wall Street Journal surveyed economists, and they projected retail sales would increase by 0.2 percent and 0.4 percent when excluding car sales. Bloomberg's survey of 82 economists also estimated an increase of 0.2 percent for overall retail sales. Without car sales, the 82 economists had projected an increase of 0.1 percent.
July's retail results provided the weakest sales since January, although the lackluster January sales were blamed on winter storms that kept potential shoppers at home.
Analysts and executives stated the reason for the recent slow sales are due to consumers becoming cautious with their money.
"Since a short-lived rebound in sales in February and March, the consumer has continuously slowed consumption," said Sterne Agee Chief Economist Lindsey Piegza, in a note to clients.
"The consumer continues to be a cautious purchaser of products," CVS Caremark Corp. said Chief Executive Larry Merlo.
"There's no sign of momentum or enthusiasm out of the consumer right now," said Pierpont Securities LLC. Chief Economist Stephen Stanley.
Although car sales were not positive, Toyota Vice President Bill Fay remained optimistic as evident during the company's earnings call on Aug. 1, stating, "There's every reason to believe the auto industry can maintain these levels in the months ahead."
"The low interest-rate environment gives consumers a great chance to come in and get very affordable financing or a very good lease deal, which I think has, in part, fueled the strength of the industry this year," Fay added. "With interest rates forecasted to stay pretty low, I think that's certainly one component of all of our optimism going forward."
With Toyota, fellow car manufacturers Chrysler, Ford, Nissan and General Motors reported volume gains of 9 percent or higher for July in comparison to July 2013.
Economists do express hope since the unemployment rate continues to decrease and more Americans return to work for the third quarter. The latest unemployment rate in the U.S. is 6.2 percent, down 7.3 percent from last year.