Retail sales figures are flat but a deeper dive shows consumer resilience

Retail sales numbers for the month of June are out today, it’s a measure of how spendy we’re all feeling. Off the top it looks like consumers were sluggish, with retail sales flat for June. But under the surface of that number, the consumer is actually looking really good. 

It was the price of soy milk that did it for Binh Ly.

“I’ve been collecting receipts for all these different grocery stores,” he said. Ly is 34, lives in Brooklyn, and this year he decided to go hard on comparison shopping

“At Target a bottle of soy milk could be $4.99, now but at like the local Fresh Associated it’s $6.50.”

He says he wanted to support local small grocery stores, the little guys, the mom and pop, but that soymilk price tag was just… a no.

“And so I’ve definitely avoided those smaller grocery stores as of late,” he said.

Economists have wondered if this kind of increasing price sensitivity was going to result in consumers spending less. And at first glance, that looked like it could be the case with today’s retail sales numbers. The overall number was flat with automobile sales down at least 2%. But that, it turns out, was an illusion.

“The software company that provides a lot of the back office software for car dealers was hacked,” said Eric Winograd, chief economist at AllianceBernstein.

“And that resulted in a dip in auto sales because dealers were struggling logistically,” he said.

So the car sales don’t really count. Consumers spent less on gas too, but that’s cause gas prices fell. So, when you take all that stuff out, we actually spent more in June — 0.8% more than in May.

“Some of the bright spots in June were housing related goods,” said Lydia Boussour, senior economist at EY.

“If you look at furniture, that category was up 0.6%, if you look at online shopping that was also quite strong at 1.9%,” said Boussour.

So consumers may be becoming pickier, but they’re still consuming.

“The labor market is still relatively healthy, household balance sheets are relatively healthy, and that’s what keeps the consumer going,” said Scott Helfstein, head of investment strategy at Global X ETFs.

And if the consumer keeps going, the economy does too.