Today, we will focus on the latest US retail sales data, which is our leading guide for foreign trade exports.


1. The latest data report just released on the official website of the US Department of Commerce shows that US retail sales increased by 0.7% month on month and 3.2% year-on-year in July. The growth rate of US retail sales in July exceeded expectations, highlighting that the resilience of US consumers is helping to drive the US economy forward.



2. The figures for July were driven by a 1.9% month on month increase in sales from non physical (online) retailers, thanks to Amazon's Prime Day event. Amazon stated that the first day of its two-day July event was its largest ever sales day. Especially low-income families hoard necessities and school supplies. Sports goods and related stores increased by 1.5% month on month, while food services and drinking venues increased by 1.4% month on month. The categories with unfavorable decline in sales are furniture sales, which decreased by 1.8% month on month, electronic products and appliance stores, which decreased by 1.3% month on month, and automotive and component dealers, which decreased by 0.3%. The only service category in the retail sales report, food services and drinking places, saw sales continue to increase by 1.4% after growing by 0.8% in June, which is considered a key indicator of household financial condition.



3. Tonight's report provides support for one side's judgment that the US economy may be able to avoid the highly anticipated recession caused by the Federal Reserve's series of interest rate hikes aimed at controlling inflation. Since March 2022, the Federal Reserve has raised interest rates 11 times in a row, raising key borrowing rates by 5.25 percentage points, reaching the highest level in over 22 years. Anyway, out of the $26.8 trillion US economy, about two-thirds of consumers have persevered. As savings begin to dry up, American consumers have shown more willingness to use credit cards. In the second quarter of 2023, the total outstanding debt of credit cards exceeded $1 trillion for the first time!



4. In summary, looking into the future, the prospects for consumers are still unclear. On the one hand, rising defaults, high debt repayment costs, reduced savings during the pandemic, and the recovery of student loans all pose an imminent threat to the main engine of the economy. Continuously, the wage growth rate of many Americans has finally surpassed inflation, enhancing household purchasing power. However, this may also mean that the Federal Reserve will have to maintain higher interest rates for a longer period of time.



5. Consumer spending accounts for more than two-thirds of the US economy. Although consumer spending slowed down from its strong pace in the first quarter in the second quarter, this growth is enough to help guide the US economy to reach an annualized growth rate of 2.4% between April and June. The retail sales growth in the United States in July exceeded expectations, as Americans increased online shopping and dining out, indicating that the economy continued to expand in the early third quarter and contained the recession. The expected GDP growth in the third quarter was raised to around 3%.