- US retail sales drop much harder in July than expected
- Consumers are less eager to spend on items they don’t need
- Looming inflation and COVID concerns may fuel more interest in investments
BELGIUM (CoinChapter.com) — Retail sales in the US are not looking good, fueling more fear over looming inflation. Consumers purposefully spend less money on things they do not need. Early predictions if a small retail sales slide did not come true and even higher consumer prices are a very likely outcome.
US Retail Sales Go Off The Cliff
Analysts expected a decline in the US retail sales for July 2021, although only a minor one. A slide by 0.2% is nothing to worry about, as that can occur at any moment. Unfortunately for the analysts, the final tally is 550% worse, resulting in a 1.1% collapse. Any decline in sales by over 1% usually does not bode well for the country in question or its consumers.
As consumers represent nearly 70% of all activity across the United States, a slide in retail sales is unwelcome.
One can even argue this decline does not bode well for the overall economic health of the US. However, some analysts remain positive and hopeful regarding what the future may bring. Unfortunately, that positive outlook may be shortsighted, as consumer spending may not increase in the coming months.
Growing fears over inflation driving prices higher are one factor to consider.
The end of stimulus money by the government is another significant factor. Additionally, there are fears over the delta variant of COVID-19 spreading like wildfire. These three factors combined can trigger an ongoing decline in retail sales.
Although the motor vehicles and parts dealers are the main “culprits” for this decline, clothing and book stores and sporting goods locations, do not fare much better.
Prices for goods and services are rising across the board.
Energy, gasoline, and food and beverage at bars or restaurants are all up by at least 1.7%. While that is a good sign for the economy, it also shows that consumer spending may lean toward “fun” and “necessary things, rather than unnecessary expenses. As a result, retail sales may not see much recovery if this uneasy situation remains in place.
What To Do With Excess Funds?
As consumers seem less eager to spend their money on frolicky things, there can be an excess of funds for users to do with as they please.
Therefore, saving some money for unexpected expenses and a rainy day remains advisable during uncertain economic conditions. However, keeping money in a bank account at the current interest rate isn’t ideal either.
There is no point in losing money when one can use it for other purposes. Blindly spending on retail sales is not the most viable solution either.
Investing remains an option for everyone, although the market of choice will differ.
At this point, any option seems better than putting it into a savings account. It is pertinent to use one’s wealth wisely rather than splurge on goods and services that aren’t necessary or potentially profitable.