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Nationwide retail sales were up in the second quarter year over year, a positive sign for the overall economy, though department store revenue continued the drop.
From April to June, retail sales in the U.S. grew by 5.9 percent compared to the same period in 2017, the U.S. Commerce Department reported Monday, , according to the Wall Street Journal. June sales rose 0.5 percent from May figures.
The news wasn’t good for everyone.
Department store sales dropped 1.8 percent, the largest decline in more than two years. Traditional retail’s dip coupled with rapid rent growth have put the squeeze on tenants and landlords in high-stakes markets like Manhattan.
Some landlords have done the otherwise unthinkable: lowered rents. In Manhattan, the average price of ground-floor retail dropped by 19.5 percent in 13 of 16 shopping districts in the first quarter of the year.
Vitamin shop landlords remain healthy though. Spending at health and personal care stores rose by the largest month-over-month margin in 14 years, according to the Journal.
Vehicle sales and higher gas prices were primary drivers of the growth in overall consumer spending, although fluctuating gas prices could muddy the Commerce Department’s retail growth figures, which are not adjusted for inflation.
Consumer spending accounts for more than two-thirds of U.S. economic output. The strong numbers prompted economic forecasting firm Macroeconomic Advisors to raise its expected second quarter GDP growth to 5.1 percent from 4.9 percent. The Commerce Department releases its GDP growth estimate for the second quarter at the end of July. First quarter GDP growth was 2 percent.
The Federal Reserve expects GDP growth to land around 2.8 percent for the year, and is planning for additional hikes to the federal benchmark interest rate in order to curb possible inflation. That typically slows growth and prompts lenders to raise mortgage and commercial loan rates. [WSJ] — Dennis Lynch