Consumers boost spending

Retail sales rose in June, the Commerce Department reported Friday, an unexpected jump that came as American consumers boosted spending on dining out and buying clothes and gadgets, even as sales of other items like cars fell.

The 0.6% increase last month followed a drop in spending in May. But the data also highlighted the unevenness of the economic recovery. As sales of cars and car parts dropped 2%, those at clothing stores and electronics stores climbed. With gas prices rising, spending at gas stations also increased sharply.

June’s sales were better than economists had expected. After falling to record lows about a year ago, sales rebounded this spring and are now fluctuating monthtomonth, propelled by the reopening of the economy. But economists expect sales will also be hampered by new fears over the delta variant of the coronavirus and rising prices.

The Consumer Price Index rose at the fastest pace in 13 years in June as inflation accelerated, the Labor Department said earlier this week.

“You’re starting to see a pickup in inflation expectations that might make consumers more cautious in terms of opening up their pocketbooks when they’re spending,” Beth Ann Bovino, U.S. chief economist at S&P Global Ratings Services, said ahead of Friday’s release.

Spending is also shifting from durable goods, such as electronics and furniture, to leisure activities, Bovino said. That spending isn’t reflected in Friday’s report.

Weighing on sales last month was a shortage of computer chips that’s limiting how many cars and trucks automakers can deliver to dealers. The production of motor vehicles and parts declined 6.6% in June, the Federal Reserve reported Thursday.