US Consumers Resilient Amid Oil Risks
US retail sales rose slightly in June, indicating that household consumption remains quite strong even though inflationary pressures and geopolitical risks have not fully subsided. Census Bureau data on Thursday (July 16) showed that retail spending rose 0.2% in June, after being revised up by 1% in May.
The headline increase is actually stronger if you exclude sales at gas stations. Excluding gas stations, retail sales increased 0.7%. A 5.3% decline in gas station revenues was the main drag as national gasoline prices fell by about 50 cents per gallon in June.
Seven of 13 retail categories recorded increases. Online or non-store retail sales jumped 1.9%, the largest increase in nearly a year, likely helped by Amazon's Prime Day event. Discretionary categories such as sporting goods, hobbies, electronics, and household appliances also strengthened.
Spending on motor vehicles and parts rose the most since July 2025, while spending at restaurants and bars also increased slightly. This data signals that US consumers still have purchasing power, especially as lower gasoline prices provide additional room for other spending.
However, the future outlook is not entirely secure. US-Iran tensions have again pushed up oil prices and disrupted shipping through the Strait of Hormuz. If energy prices spike again, inflationary pressures could resurface and reduce household spending in the coming months.
Impacting the market, the still-positive retail sales data could support the dollar and yields, indicating the US economy remains resilient. However, because CPI and PPI inflation were previously more benign, the market still believes the Fed needs to raise interest rates before then. The next focus will be on oil prices, employment data, and the direction of US consumption ahead of the Fed's decision. (arl)
Source: Newsmaker.id
