Recent economic indicators have painted a cautious picture of the U.S. economy. Employment growth has been consistently downgraded, inflation remains persistently high, and gross domestic product is expanding at roughly half the pace recorded during the same period last year. A closer examination of GDP figures reveals that second-quarter growth was partly inflated by a decline in imports. Meanwhile, personal consumption expenditures—a previously reliable driver of economic activity—have weakened, rising only 1.6% in Q2 following a mere 0.5% increase in the first quarter, trailing behind overall GDP expansion. n nDespite these headwinds, core retail sales—excluding automobiles, gasoline, food services, and building materials—have emerged as a notable strength. Through August, these sales are up more than 5% compared to the same period last year, outpacing total consumer spending. According to the CNBC/NRF Retail Monitor, this resilience reflects sustained consumer willingness to spend on necessities, even amid declining confidence. n nOn a sectoral level, seven of the eight core retail categories have maintained flat or positive year-to-date performance relative to 2024. Five of them have posted gains exceeding 5% compared to the prior year, underscoring underlying demand. n nLooking ahead to the holiday season, sentiment remains cautiously optimistic. Although economists often classify holiday purchases as discretionary, consumers appear to treat them as a priority. Many are expected to cut back on non-essential service spending to preserve budgets for key goods. The National Retail Federation is set to release its official holiday spending projection in early November. For further insights, the CNBC/NRF Retail Monitor offers updated retail performance metrics. n— news from National Retail Federation | NRF n
— News Original —nRetail remains the silver lining as economic clouds darken n
Data on the economy has not made for very uplifting reading in recent times. Job growth keeps getting revised downward, inflation appears to be uncomfortably sticky and GDP growth is currently running at about half the rate it was last year. n nCore retail sales are up 5% year-to-date through August, outperforming broader consumer expenditures. n nCNBC/NRF Retail Monitor n nIf we dig into the GDP data, we can see that Q2 was artificially inflated by a slowdown in imports. Personal consumption expenditures, which have been a key bright spot in recent times, also showed some weakness. PCE growth has been running below the rate of GDP, growing at just 1.6% in the second quarter after an even weaker 0.5% in Q1. n nDespite all this, core retail sales (which exclude the gas, auto, food and building supplies sectors) have been the silver lining on the economy, growing faster than overall consumer spending. According to data from the CNBC/NRF Retail Monitor, year-to-date, core retail sales are up over 5% through August as consumers continue to show willingness to spend on essential goods. n nOn a sector basis, seven out of the eight core retail sectors have been either flat or grew year-to-date versus 2024. Five of those eight have seen growth of over 5% versus last year, illustrating their strength despite weak consumer sentiment. n nLooking forward to the ever-important holiday season, there is reason to be positive. While many economists consider holiday spending to be discretionary, consumers have treated it as a very essential category. We expect that consumers will continue to make savings on nonessential categories — particularly in the services sector — in order to allow them to spend on essential goods categories. n nNRF will be releasing its holiday forecast the first week of November. Check out the CNBC/NRF Retail Monitor for more retail sales data.