You know that feeling when you’re scrolling through your bank account after a shopping spree, simultaneously proud of your purchases and horrified by your balance? Well, that’s basically the entire U.S. economy right now.
Two reports dropped on Friday that perfectly capture our collective economic confusion. On one hand, Americans are still shopping like there’s no tomorrow. On the other hand, we’re all apparently convinced the world is ending. It’s giving major “this is fine” dog energy.
The Good News: We’re Still Buying Stuff
July retail sales came in hot, rising 0.5% from June to hit $726.3 billion. That’s the second straight month of increases, which sounds pretty decent until you remember we’re all supposedly broke and terrified.
Car sales led the charge with a 1.6% bump – because nothing says “economic uncertainty” like financing a depreciating asset for seven years, right? Furniture sales jumped 1.4%, probably because everyone’s still trying to make their home office look less like a disaster zone on Zoom calls.
Even grocery stores saw a 0.5% increase, though let’s be honest, that might just be inflation doing its thing. When a bag of chips costs $6, even buying the same amount of food looks like “growth.”
The Plot Twist: We’re All Doom-Scrolling
Here’s where it gets weird. Despite all this spending, consumer sentiment just face-planted. The University of Michigan’s consumer sentiment index dropped to 58.6 in August, down from 60.9 in July. For context, that’s like going from “mildly pessimistic” to “actively planning for the apocalypse.”
The really wild part? The “current conditions” score – which measures how people feel about right now – tanked from 68.3 to 60.9. So we’re literally living through decent economic conditions while simultaneously convinced everything is terrible. It’s peak 2025 energy.
The Market’s Reaction: *Shrugs*
Retail stocks responded to this mixed bag of data by doing what they do best: absolutely nothing dramatic. The S&P SPDR Retail ETF (XRT) dropped a whopping 0.2%, while the Van Eck Retail ETF (RTH) fell 0.3%. Walmart dipped 0.5%, and Target dropped 0.9% – basically the stock market equivalent of a collective “meh.”
As Chris Zaccarelli from Northlight Asset Management put it, “As long as consumer spending holds up and companies are able to retain workers because of that robust spending, the flywheel can continue to spin.” Translation: As long as we keep buying stuff we don’t need with money we don’t have, everything’s fine!
The Bottom Line
We’re living in an economy where people are spending like optimists but feeling like pessimists. It’s the financial equivalent of eating a whole pizza while complaining about your diet. The data suggests consumers are in “okay shape,” but our collective mood is somewhere between “concerned” and “stockpiling canned goods.”
Will this contradiction resolve itself? Probably. Will it happen before we all give ourselves economic whiplash? That’s the million-dollar question – or in today’s economy, the $726.3 billion question.