Consumers Are Still Spending, Just on Different Things

Online, grocery sales rose in August as restaurant and bar activity leveled off

Woman at furniture store choosing sofa
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Oscar Wong/Getty Images

Consumers in August spent more on groceries, furniture and online shopping as a spike in virus cases kept restaurant and bar sales flat.

Retail sales for August unexpectedly rose, edging up 0.7% to $618.7 billion from July, according to seasonally adjusted data released Thursday by the Census Bureau. (Economists had forecast a slight decline of less than 1%.) Sales at nonstore retailers, including online stores, jumped 5.3%, while sales at furniture stores rose 3.7%, grocery stores, 2.1%, and department stores, 2.4%.

The effect of the delta variant of the coronavirus was felt in other ways, too, with sales at restaurants and bars holding steady (it was the first time since February they haven’t increased) and gas stations posting their smallest gain since the decline in gas sales in April. Spending on vehicles fell as manufacturers continued to grapple with a shortage of parts.

Where we spend our money—and how much we spend—is especially important as the economy navigates the COVID-19 pandemic. Consumer spending is the largest contributor to economic growth in the U.S., and monthly retail sales have soared this year, bolstered by people returning to work, government stimulus checks and, more recently, monthly installments of the new federal child tax credit. 

Sales are now well above levels seen before the COVID-19 pandemic shut down the economy in March 2020. August sales were 18% higher than the pre-pandemic peak in January 2020. Retail sales are not adjusted for inflation, however, so that doesn’t factor in the effect of this year’s higher inflation rates.

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