CNN business reporter Matt Egan on Friday highlighted “solid” consumer spending in July amid President Donald Trump’s tariff regime.
Retail and food services sales in July rose .5% from June and 3.9% from July 2024, according to the Commerce Department. Egan, on “CNN News Central,” said the report came as “a relief” due to worries about Trump’s tariffs and the large role of consumer spending in America’s economy. (RELATED: Chinese Firms Fleeing US Exchanges As Trump Turns Up Heat On Beijing)
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“Nice to be here on a summer Friday with some good news, right? Consumer spending. The engine of this economy. It increased by a solid amount in July. You see .5%. That’s exactly as expected,” Egan said. “And this is a relief because there were some concerns earlier this year when we saw consumer spending drop. And consumer spending — this is 70% of the economic output. So when we did see those declines, that did raise concerns about consumers possibly being tapped out and all this confusion over the erratic trade war.”
“Also significant, we saw an upward revision to June, right? June was a solid number, and it was revised even higher,” he continued. “You can see this is the trend of monthly increases and decreases for retail sales. And earlier this year, again, you do see those concerning drops. But now look at this. We have two straight months of positive numbers.”
However, Egan noted that the data is not inflation-adjusted and that there has been some inflation, attributing it to the president’s tariffs. He also said that the report does not identify who is doing the spending, suggesting that wealthy Americans may be overly represented in the data.
Egan underscored increases in spending for autos, furniture, home furnishings stores, clothes and department stores.
“Those are all solid numbers. But there were some declines as well. Electronics and appliance stores — spending fell there. Miscellaneous stores as well — that was down. Food services and drinking places, that’s bars and restaurants — that went down,” he said. “And that’s notable because obviously that is very much discretionary spending. So I think when you put it all together, this is a solid report, again, about the biggest driver of the economy.”
Moreover, the consumer price index (CPI), a broad measure of the prices of everyday goods, only increased a seasonally-adjusted 0.2% in July, the Bureau of Labor Statistics (BLS) reported on Tuesday.
Fellow CNN business reporter Vanessa Yurkevich appeared to express amazement on Tuesday about tame energy and food prices in the BLS report.
“When you look at the key categories that we always look at — energy, food and shelter — energy fell by 1.1%,” Yurkevich said. “That was largely driven because of gas prices falling in the month of July by 2.2%.”
“Look at that food! I mean, this is where people spend their money, right? Food, every single day,” she continued. “Food flat, 0%, and actually down at the grocery store by 0.1%.”
Many economists predicted that Trump’s sweeping tariffs would cause inflation to surge and have other negative effects, but the economy has shown signs of strength. For instance, the stock market has soared to record highs, while manufacturing output rose 0.1% in June after an upwardly revised 0.3% increase in May, the Federal Reserve Board reported on July 16.
Yet job growth has slowed as the BLS reported on Aug. 1 that the U.S. economy added just 73,000 nonfarm payroll jobs in July.
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