Excluding both motor vehicle and gasoline, sales were up 0.6% in July. Sales at food and beverage stores gained 0.6% last month, the strongest growth rate since December.
Consumer spending is a widely observed indicator for the U.S. economy since it represents about two-thirds of economic output. Consumer spending was weak in the first quarter of this year but quickly picked up in the second, a trend which the recent report suggests has continued early in the third quarter.
“The American consumer is healthy,” Michael Kors Holdings Chief Executive John Idol said during an Aug. 8 earnings call.
The improved spending is attributed to the low unemployment rate, which was 3.9% in July, along with rising wages. The strength in the jobs market and a broader economic growth have contributed to the higher consumer confidence. Furthermore, tax cuts also appear to be supporting the robust consumer demand as many households have experienced lower withholding from paychecks due to the tax overhaul.
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