What Slower Retail Sales Mean for the US Economy

Sept. 5, 2013
Retail sales trends show consumers under slow but steady pressure.

Target, Wal-Mart and Macy’s are reporting disappointing second-quarter sales results.  Target’s same store sales rose 1.2%, less than the growth rate in overall retail sales.  The consumer is getting pinched by higher payroll taxes and mild wage gains. 

Americans’ after-payroll-tax income rose 0.8% year-over-year.  Pre-tax wages went up a steeper 1.9% year-over-year.  The difference in growth rates is likely the result of higher payroll taxes.  Higher taxes are not leaving much of a boost in workers’ take home pay.

This mild boost is more than offset by a 2.0% increase in July in the Consumer Price Index (CPI), leaving consumers hard pressed to continue the spending needed to keep the economy expanding at its current pace.  These spending decisions are made even more difficult when you factor in that energy costs are up 4.7% year-over-year for the month of July and the cost of shelter is up 2.3%. 

The slow squeeze on consumers could be eased by a larger increase in wages or a rollback on payroll taxes.  Neither seems feasible right now.  We are projecting that this spending squeeze will contribute to the mild downturn we are anticipating for 2014.   

About the Author

Alan Beaulieu Blog | President

One of the country’s most informed economists, Alan Beaulieu is a principal of the ITR Economics where he serves as President. ITR predicts future economic trends with 94.7% accuracy rate and 60 years of correct calls. In his keynotes, Alan delivers clear, comprehensive action plans and tools for capitalizing on business cycle fluctuations and outperforming your competition--whether the economy is moving up, down, or in a recession.

Since 1990, he has been consulting with companies throughout the US, Europe, and Asia on how to forecast, plan, and increase their profits based on business cycle trend analysis. Alan is also the Senior Economic Advisor to NAW, Contributing Editor for INDUSTRYWEEK, and the Chief Economist for HARDI.

Alan is co-author, along with his brother Brian, of the book MAKE YOUR MOVE, and has written numerous articles on economic analysis. He makes up to 150 appearances each year, and his keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends. 

Prior to joining ITR Economics, Alan was a principal in a steel fabrication company and also in a software development company.

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