Friday, August 12, 2016

July consumer spending cools, stalling chance of rate hike

Sporting goods retailer Sports Authority, headquartered in Englewood, Co., closed its last standing stores in July.

Oil and gas profits down, online spending up

Retail sales across the U.S. remained flat in July, suggesting that Federal Open Market Committee members will refrain from raising the central bank's interest rates for some time until more tangible growth is seen.

Lower gasoline prices in July were one reason for the tepid sales following stronger growth in June. Cheaper gas did boost car sales, which may have pulled consumers away from spending on other products.

Another area of strength was online shopping, while brick and mortar stores struggled. Consumers are increasingly spending more online than in department stores, as retailer Macy's slashes its number of stores. Locally in Colorado, sporting goods powerhouse (and namesake of the Denver Broncos' stadium) Sports Authority shuttered its last stores nationwide in July after filing Chapter 11 bankruptcy.

The coming weeks and months will tell whether July was an anomaly in spending - especially following several reports of solid jobs data - or if there is a larger American spending shortage. The U.S. dollar continues to stay strong compared with other currencies, also helping to temper inflation.

As long as consumer spending is stunted and inflation is well under the benchmark of 2 percent, most economic analysts expect no significant change in interest rates, currently at near all-time lows.