Americans spent more at retailers in July despite higher prices
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Americans spent more at retailers in July, with retail sales jumping 1% from June to July, the biggest increase since January 2023. Auto dealers, electronics and appliance stores, and grocery stores all reported strong sales gains. The data reassures that the U.S. economy remains resilient despite higher prices and elevated interest rates. The prospect of a still-growing economy is likely to be promoted by Vice President Kamala Harris' presidential campaign, which is preparing to roll out policies to ban 'price gouging' on groceries. Other economic data released was mostly positive, including a report on first-time applications for unemployment benefits, which showed that businesses are mainly holding onto their workers and not increasing layoffs. Economists at Morgan Stanley have boosted their forecast for growth in the July-September quarter to a 2.3% annual rate. Adjusted for inflation, sales rose about 0.8% last month. Auto sales jumped 3.6%, the largest increase since January 2023. Sales at electronics and appliances stores surged 1.6%. Restaurant sales were up 0.3%. The latest data is consistent with an economy that is headed toward a 'soft landing,' with the Federal Reserve expected to begin cutting interest rates next month with a modest quarter-point reduction in its key rate. While Americans are still willing to spend, they are increasingly searching out bargains and shopping at lower-priced outlets like Walmart. Some economists worry that much of Americans' spending now is being fueled by the increased use of credit cards. However, cooling inflation may give households a needed boost. Consumer prices rose just 2.9% in July from a year earlier, the smallest year-over-year inflation figure since March 2021. Walmart reported strong sales in the three months that ended July 31 and hasn't seen any signs of weakness from the consumer. Other companies are also starting to offer lower prices to entice consumers, helping slow inflation.

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https://www.pbs.org/newshour/economy/americans-spent-more-at-retailers-in-july-despite-higher-prices