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- Spending at retailers and restaurants fell 1.1% in July to $617.7 billion, the Census Bureau said Tuesday.
- Economists expected sales to fall 0.2%. The drop suggests rising COVID cases slowed the US recovery.
- Consumer spending counts for 70% of economic activity, making retail sales a key measure of the rebound's pace.
- See more stories on Insider's business page.
Americans' spending fell more than expected in July, suggesting the latest rebound in COVID cases could hamper the US economic recovery.
Retail sales fell 1.1% to $617.7 billion last month, the Census Bureau announced Tuesday morning. Economists surveyed by Bloomberg expected sales to fall 0.2% to roughly $620 billion. The reading marked the second decline in three months and dragged sales further from April's record high of $629 billion.
June sales were revised to $624.7 billion from an initial print of $621 billion.
Spending at auto dealers and parts vendors fell roughly 4% through the month. Sales at clothing and clothing accessories stores sat 43.4% higher year-over-year, and spending at restaurants and bars was 38.4% higher from July 2020, according to the report.
Consumer spending counts for roughly 70% of economic activity in the US, making retail sales a key measure for the recovery's strength. Sales rebounded strongly through last spring as stimulus checks included in the CARES Act drove spending higher. Direct payments included in two following aid packages similarly boosted spending, and sales hit a record high in April as the country began reopening.
Spending has since dipped as overwhelming demand butts heads with supply bottlenecks. Shortages of products ranging from semiconductors to lumber cut into businesses ability to service Americans' spending spree. The imbalance also helped inflation climb to its highest level since 2008, though the latest reading suggests price growth possibly peaked in June.
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