Retail sales slow, lowering expectation for economic growth

[...] the flat reading for overall retail sales suggested that the economy might not rebound as quickly from a slump that struck early this year as economists had been expecting.

[...] a separate report Friday that producer prices last month registered their sharpest drop since September was a reminder that inflation remains lower than the Federal Reserve wants it to be.

July’s retail sales figures “won’t inspire much confidence in the economic momentum at this point,” Michael Dolega, senior economist at TD Bank, said in a research note.

“Given that employment has rebounded, consumer confidence is holding up, I’m not overly concerned,” said Paul Ashworth, chief U.S. economist at Capital Economics.

The retail sales figure is measured in dollars, which means that falling prices can reduce the figure even if consumer demand remains solid.

Steady hiring and some evidence of rising pay have been boosting Americans’ confidence and encouraging spending, which jumped 4.2 percent in the April-June quarter, the most in 18 months.

The economy expanded at a tepid annual pace of just 1 percent in the first six months of 2016, despite the healthy showing in second-quarter consumer spending.