What June’s retail sales say about consumer sentiment in 2024
Retail spending is up year over year as shoppers take advantage of deals and begin to spend more as inflation cools. However, there are still indicators showing that the U.S. consumer is being cautious with discretionary spending.
The U.S. Census advance retail estimates released Tuesday show that sales were $704.3 billion in June 2024, a 2.3% year-over-year increase. Total sales for the first half of the year were at $4.1 trillion, a 2.8% year-over-year increase. The picture is even better than expected when taking out spending on motor vehicles and gasoline, which works out to a 3.6% year-over-year increase in spending and a 0.8% increase from May 2024.
While this latest survey shows people are willing to spend, it’s not necessarily without reluctance. Overall, the June numbers are somewhat flat compared to what was seen in May. There’s also an increased focus on deals, which shows up in consumer spending spiking at peak moments, like Memorial Day sales or during this week’s Prime Day. AI search firm Algolia found in a recent survey of 1,000 U.S.-based adult consumers that 49% of people are waiting for summer sales to shop for something that they know they want to buy. In other words, shoppers are planning out their purchases far in advance, but are waiting until big sales periods hit to actually buy it in the hopes that they can get a better deal.
Ted Rossman, senior industry analyst at Bankrate, said that’s because prices are up roughly 20% over the past 2.5 years, a reality that leaves most people feeling squeezed. All told, the spending data shows that people are still willing to make discretionary purchases despite consumer sentiment hitting what appears to be an eight-month low, according to the University of Michigan’s index.
“The data is more positive than the sentiment,” he said. “Even if they’re working and their wages are up, they don’t necessarily feel good about those things because they feel like they’re not getting ahead.”
Here’s a closer look at what the U.S. Census data released Tuesday says about activity in certain sectors.
Clothing & accessories
Americans continue to spend on apparel, with 2.9% growth in the category year over year. Looking at spending by raw dollars, June apparel spending hit an all-time high of more than $26.36 billion. Chip West, director of category strategy at marketing technology firm Vericast, said that’s because this category tends to be a splurge or guilty pleasure spend, where people can justify spending a little bit to update their wardrobe. There’s also a seasonality to it.
Some companies are already seeing gains from this trend. Levi’s, for instance, exceeded some expectations for the first two quarters of the year so far, citing its pivot to DTC operations and a growing focus on women’s and denim.
Some industry watchers say this space could grow as back-to-school sales kick in. Piyush Patel, chief ecosystem officer at Algolia, said that the sector is typically weaker in the summer. “While early birds began their back-to-school shopping and kept retail afloat this past month, July sales will far surpass spending in June,” Patel said in an email.
Furniture and home furnishing stores
This sector has seen one of the biggest drops in spending year over year. Spending was down 7% to about $64.3 billion for the first six months of the year.
Some of that can be attributed to pulled-forward demand from the Covid-19 lockdown that saw widespread home renovations. More recently, high interest rates are slowing down the housing market, which in turn dampens renovations and repair spending. Places like Home Depot and Lowe’s have seen diminished foot traffic.
Still, June showed a bit of a bright spot. Spending slowly ticked up to over $11 million in May and June consecutively, compared to a low of $10.7 million seen in March 2024. Bankrate’s Rossman said this is a bright spot — it could mean the industry is normalizing and people are beginning to replace items in their homes.
“We’re starting to see a shift and that pendulum swinging a little bit back,” he said.
Vericast’s West said that the category is one that has been affected by the trend of people being more cautious with discretionary dollars — especially with high-ticket items. But the June flattening may be due to Memorial Day sales, as well as any seasonal outdoor furniture demand. “It’s been a long time since we’ve seen increase in furniture. It’s not a big increase, but it’s a good sign,” West said.
Nonstore retailers
Out of all areas, the nonstore sector has shown the most growth so far this year. Monthly sales were up 8.9% year-over-year. And the first six months of the year were up 8.5%, with total spending of $694 billion.
This somewhat elusive category includes spending data from exclusively e-commerce businesses, as well as e-commerce divisions of brick-and-mortar companies that aren’t fulfilled from their stores, according to Census definitions. It also includes channels like catalogs or infomercials.
The census separately tracks e-commerce spending with quarterly releases. The last release in May found that e-commerce is still hovering at around 15% of total retail sales. But it’s also growing faster than the rest of retail; e-commerce spending was up 8.5% in the first quarter of 2024, compared to 2.8% growth for total retail sales during the same period.
The growth is no surprise as places like Shein and Temu bring in billions of sales. West from Vericast also attributes some of this growth to the dominance of marketplaces like Amazon — and anticipates another spike in July thanks to Prime Day.
“People are looking for discounts and deals,” West said, “and many will not buy until they find one.”