What Unexpected Boost in June Retail Sales Says for Recession Fears and How Tables Could Still Turn Based on Consumer Spending

Photo of a young woman shopping in the city while checking her mobile phone and smiling.
Csondy / Getty Images

If the U.S. is headed for a recession, American consumers could be better poised to handle it than they have in the past, several experts say. JPMorgan Chase CEO Jamie Dimon said during the bank’s Q2 earnings call last week that, “Consumers are in good shape. They’re spending money. They have more income. Jobs are plentiful.”

See: Ways You Can Lose Your Social Security Benefits
Find: Here’s How Much Cash You Need Stashed If a National Emergency Happens

In fact, the Advance June Retail Sales Report released from the U.S. Census Bureau on July 15 showed retail sales rising by 1% — contrary to the expected 0.1% decline predicted in May. Since figures aren’t adjusted for inflation, they partially reflect higher prices.

Still, it’s a positive indication for the economy that consumers continue to spend, experts say. “People did not fold in the face of the Ukraine shock and the subsequent surge in food and energy prices,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told Industrial Distribution. “Instead, they ran down a small part of their pandemic savings in order to keep up their discretionary spending.”

Make Your Money Work for You

Even when you remove inflation from the equation — per Kathy Bostjancic, chief U.S. economist at Oxford Economics — retail sales were still up by roughly 0.3% in June, according to Industrial Distribution.

Dow Jones Surges Upward

In other good economic news, the Dow Jones Industrial Average, a key indicator of the stock market as a whole, jumped 2.1% after five days of losses last week. These positive signs sparked members of the Fed to suggest a 0.75% interest rate hike at the next Federal Open Market Committee Meeting, rather than a more aggressive hike.

However, even with these positive indicators, consumers are still concerned that rising inflation will outpace their paychecks and drain their savings accounts. “Consumers signaled strong concerns that inflation will continue to erode their incomes,” said Joanne Hsu of the University of Michigan. Hsu runs the university’s Index of Consumer Sentiment, which reached its lowest point since 1952 in June 2022.

Discover: The Downsides of Retirement That Nobody Talks About
POLL: Do You Tip for Service?

Make Your Money Work for You

She told WSJ that, “While consumer spending has remained robust so far, the broad deterioration of sentiment may lead [consumers] to cut back on spending and thereby slow down economic growth.”

More From GOBankingRates

Share This Article:

About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

Best Bank Accounts of August 2022

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.