In the $18 trillion-per-year U.S. economy, the consumer is king. And right now the king looks healthy — mostly.
New Commerce Department data released Tuesday shows that retail sales rose in July at the fastest clip in seven months, up 0.6 percent. That’s good news that suggests the U.S. economy might continue to grow awhile longer. After all, consumer spending on everything from cars to SummerSlam tickets to fidget spinners comprises more than two-thirds of overall economic activity in America.
But a closer look at recent retail data reveals some things to be worried about. To start, it’s not as if people are shopping a lot more across the board. Looking at the different kinds of retailers benefitting right now reveals how different groups of people are faring in the economy.
- Almost all of the record retail growth in July was driven by “non-store retailers,” essentially online retailers, which saw sales rise 1.3 percent. Brick-and-mortar stores reported a stagnant 0.1 percent increase in July.
- In the online arena, Amazon is by far the biggest winner. In fact, considering that its Prime Day promotion happened to fall in July, many analysts believe Amazon alone was a big driver of the aggregate Commerce Department data. (While Amazon didn’t disclose its sales numbers for the day, the company said it was the “biggest day” in its history.)
- Amazon Prime, a subscription service that includes free two-day delivery of most items, primarily serves high earners. Through the first half of 2017, more than 80 percent of U.S. households with incomes of $112,000 per year or more were Prime members, versus just over 50 percent of households with incomes of $41,000 or less. Amazon, however, is offering lower-income consumers a steeper discount to try to close the gap, according to Recode.
- The growing popularity of Amazon Prime has helped propel the company’s shares to a gain of more than 30 percent so far this year. Over the last five years, Amazon’s stock has more than quadrupled to nearly $1,000 a share.
So what’s the takeaway? The breakdown of the U.S. retail sales suggest that big differences exist in the financial health of the more-affluent American consumers and the less well-off. We should get more of a sense of how Americans of more modest means are doing when Target and Wal-mart report earnings results over the next few days.