Despite worries about the slow economic recovery and rising gas prices this summer, consumers actually increased spending for the first time since March according to the trade group International Council of Shopping Centers (ICSC).
“It shows some resilience among shoppers,” said Ken Perkins, president of the research firm Retail Metrics. “Let’s face it, there are a whole series of economic headwinds that they are fighting against. The results show that the consumer isn’t dead.”
According to a preliminary report from the ICSC, major chain store retail sales for August are up 6 percent, considerably above the 4.6 percent pace for July and the strongest gain since March. The U.S. Commerce Department also released data suggesting spending in July was at its highest in five months.
These reports come two days after reports that consumer confidence fell in August to its lowest level since November 2011. According to Lynn Franco, Director of Economic Indicators at The Conference Board, “Consumers were more apprehensive about business and employment prospects, but more optimistic about their financial prospects despite rising inflation expectations.”
Some of the country’s largest retailers like Wal-Mart do not report monthly sales, but figures are still watched closely as it is an indicator of consumer spending which accounts for nearly 70 percent of the country’s $2.4 trillion retail activity.
The August reports are considered important because they offer a snapshot into the back-to-school season, the second-most important shopping season behind the winter holidays. Retailers often use the results of back-to-school shopping as an indicator of how consumers will spend in November and December. The gains in August were better than the expected 4-5 percent gain that Wall Street predicted at the beginning of the month.
Both Costco and Target have reported revenues higher than analyst expectations from stores open at least a year. Costco’s revenue climbed 6 percent (4.5 percent anticipated) and Target Corp. reported a 4.2 percent revenue increase, better than the 3.1 percent predicted.
The strong sales reports are a good sign for retailers when there are signs that consumers are becoming impatient with the slowly improving economy and jobs market.