On Tuesday, the Census Bureau reported that retail sales in the U.S. fell sharply by 1.1% in July. This is following growing consumer concerns regarding the delta coronavirus variant and overall rising inflation rates.
This research also follows a recently released study by the University of Michigan. On Friday, they released their monthly consumer sentiment index, which presented a sharp decline in August of 13.5%. Furthermore, this is the largest drop since April 2020 following global lockdowns due to the COVID-19 pandemic.
Rising prices for consumer goods and fears over the delta variant are resulting in a decline in consumer’s enthusiasm levels. Affinity Solutions, which records millions of debit and credit card users in real time, found that consumers increased online purchases by 3% in July.
“July retail sales provide a first true look at the impact of the Delta variant, and while it is likely too soon to tell, it appears to be having some impact given the results remain relatively flat for the second straight month,” said Jonathon Silver, the found and CEO of Affinity Solutions.
Their research also found that there has been a shift to spending on services, instead of retail.
“Our data showed strong growth within food and drinking places with annual increases among upper- and middle-income groups at 55% and 30%, respectively,” he added. “These groups also demonstrated an approximate 5% to 7% month-over-month increase in spending as they continue to dine out and soak up the rest of summer, despite growing concerns of the Delta variant and renewed mask mandates.”
However, Walmart released second-quarter earnings on Tuesday which exceeded the expectations of Wall Street professionals. Walmart experienced an increased market share in groceries and back-to-school season. Furthermore, they predict that same-store sales will increase by 5% to 6%. Despite the enthusiastic growth predictions, the Dow Jones and the S&P 500 slid from record highs off the back off earning reports from major retailers Home Depot and Walmart.