US retail sales steady in July, easing recession fears

U.S. retail sales were unchanged in July as falling gasoline prices weighed on gas station revenues, but consumer spending appears to have held up, which could further ease fears that the economy was already in recession.

According to data from the Commerce Department on Wednesday (17), the stability in retail last month followed a 0.8% increase in June, a data revised down from 1.0% previously reported.

Economists polled by Reuters projected sales would increase 0.1%, with estimates ranging from a 0.3% decline to a 0.9% increase. Retail sales are mostly goods and are not adjusted for inflation.

The monthly consumer price index was unchanged in July after gasoline retreated from record highs, lowering the annual rate of inflation to 8.5% from 9.1% in June.

Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.8% last month, after rising 0.7% in June.

This measure corresponds more closely to the consumption component of the Gross Domestic Product.

Consumer spending grew at the slowest pace in two years in the second quarter. The modest increase was offset by weakness in business and government spending, as well as residential investment, resulting in a contraction in GDP for the second consecutive quarter.

But with the job market maintaining a rapid pace of job growth in July and industrial production hitting a record high, the economy is likely not in a recession.

Still, aggressive interest rate hikes by the Federal Reserve to dampen demand and contain inflation leave the economy vulnerable to a downturn.