US consumers continued to open their wallets in July as inflation wasn’t enough to break consumer spending’s back. According to data released by the Commerce Department on Friday, consumer spending rose by 0.5% compared to June, demonstrating a resilience among Americans despite economic pressures. Economists were expecting a 0.6% increase in spending for the month, according to consensus estimates from FactSet.
Inflation is still a top concern. Economists expect a 0.2% increase from June, forecasting it would hold at a yearly rate of 2.6%. The inflation data, released by the Commerce Department, indicates that consumers are navigating these economic challenges while continuing to make purchases.
Chicago’s July spending spree came as a result of many factors. Notably, Amazon’s Prime Day promotions encouraged increased consumer activity, alongside various competing sales events that retailers implemented in an effort to capture consumer attention. Additionally, the back-to-school shopping season contributed significantly to the uptick in spending, as families prepared for the upcoming academic year.
Even with the boost from consumer spending, the growth in GDP came in just under economists’ estimates. That expected 0.6% increase didn’t quite happen. Despite the decline, a 0.5% increase is a continued step in the right direction with positive momentum in consumer confidence.
The current, unstable economic landscape has made it a particularly tough time for consumers. While inflationary pressures have dented purchasing power, overall Americans are still focused on spending on the goods and services that they need most. This trend begs the question of how consumption will evolve in the future and whether persistent inflation in the long term will affect consumers’ spending habits and patterns.