WASHINGTON – The U.S. economy appears to be weaker than many economists had thought after a report Monday showed consumers spent cautiously in June at retail businesses.
Americans bought more cars and trucks, furniture and clothes. But they cut back almost everywhere else. They spent less at restaurants and bars, reduced purchases at home improvement stores, and bought fewer computers and electronics.
Overall retail spending rose 0.4 percent in June from May, the Commerce Department said. But excluding volatile spending on autos, gasoline and building supplies, so-called core retail sales rose just 0.15 percent. That's the weakest gain since January.
Economists said the deceleration in retail sales could slow economic growth in the April-June quarter to an annual rate below 1 percent. That's weaker than many had thought.
Still, many economists aren't changing their forecast for the second half of the year. Most expect growth will rebound to around a 2.5 percent rate.
"Job growth, income growth, rising stock prices and higher home prices all suggest a healthier state for the household sector in the second half of the year," said Paul Dales, chief U.S. economist at Capital Economics.
Consumers are still increasing their spending. But their pace has dropped off sharply from the start of the year. Core retail sales increased from April through June at a 2.7 percent annual rate. That's down from a 4.2 percent rate during the first quarter.
There were some encouraging signs in the retail sales report that consumers remain confident. Spending on cars and trucks rose 1.8 percent — the biggest gain since November. And furniture sales jumped 2.4 percent last month.
