The U.S. economy is beginning to show signs of recovery, with retail sales rebounding in August and consumers showing no signs of pulling back.
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This comes after the most recent inflation report, which showed for the first time in several months a slight cooling off in prices with inflation coming in lower than expected by economists and analysts. Another promising metric, the layoffs figure, also showed no increase suggesting employers were finally increasing the capability to control attrition rates.
While a 0.8% decline was expected, the nation's retailers instead saw a .7% increase in sales in August, according to CNBC. The figure was slightly depressed by the ongoing shipping and production issues plaguing the automotive industry, which saw a big decline in August, pulling the overall retail number down. Excluding car sales, retail sales actually rose by 1.8%.
July's retail report showed a slight decline in consumer spending suggesting that Delta variant concerns were driving people away from spending and tightening family finances once again. August's report shows that consumers simply pivoted, shifting their spending for products online and towards more furniture, hardware and grocery goods. The impending start of the school year and a return to the physical classroom for many students could also have boosted spending for the month of August. As GOBankingRates reported, parents were expecting to spend at least $400 per child for back-to-school items.
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Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients, "this report suggests Delta fears aren't stopping people spending some of their abundant cash resources on goods, even as they retreat from services," reported the Wall Street Journal. People might have stopped dining out or traveling as much, but their wallets were still put to use buying goods to be used within the home.
After the report published, the Dow sank 170 points this morning, despite the strong retail report numbers. Conflating jobless claims numbers, which recently rose slightly to 332,000 could have kept investors skittish despite strong consumer performance.
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This article originally appeared on GOBankingRates.com: Retail Sales Surge in August, Adding To Promising Signs Of Recovery