NAFCU's Chief Economist Curt Long "Eyes Turn Again to the Fed"

ARLINGTON, Va.—Total retail sales increased 0.7% in July, and while consumer growth continues to "buoy" the economy, other threats could have a negative impact, according to NAFCU Chief Economist and Vice President of Research Curt Long.

"Three segments that have struggled recently – clothing stores, sporting goods and hobby stores, and electronics and appliance stores – showed solid gains last month," said Long in a new NAFCU Macro Data Flash report. "Tariffs represent a threat to the future outlook for sales, although any negative impact may operate with a lag if skittish consumers move spending forward to get ahead of potential price impacts.

"With yet another solid economic report in hand, the Fed faces a difficult decision. Markets are convinced that the trade war, slow growth abroad, and a range of geopolitical risks mean another rate cut is forthcoming," he added.

Results among the major retail segments were mostly positive in July. The biggest gains were among nonstore retailers (+2.8%), gas stations (+1.8%), department stores (+1.2%) and restaurants and bars (+1.1%). The largest declines during the month included sporting goods and hobby stores (-1.1%) and motor vehicle and parts dealers (-0.6%).

"FOMC officials have been conspicuous in their silence since July's meeting, but next week's annual gathering in Jackson Hole should provide some clarity," Long concluded.

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