From Pymnts · PYMNTS · · 1m 20s
Big-ticket buyers keep retail's holiday hopes alive
August sales rose, but savings gaps show which households can still afford major purchases and which can't.
In brief
August sales rose, but savings gaps show which households can still afford major purchases and which can't. Retail sales are rising on big-ticket items, but only households with savings can sustain spending as others run out of budget cuts. Originally reported by Pymnts.
August sales jump on big purchases
Retail sales rose 1.2% to $773.9 billion, reversing July's decline. Electronics, furniture, and auto sales all gained.
Consumers bought what they could delay
The gains came from purchases people can postpone, like cars and appliances. Many households have already cut easier expenses.
Fear of higher prices may be pulling sales forward
Concern about still-high prices may have pushed some to buy now rather than risk paying more later.
Savings separate who can still spend
Among paycheck-to-paycheck consumers whose finances improved, 62% had savings covering over three months of expenses.
The easy budget cuts are gone
Forty-one percent blame daily spending for living paycheck to paycheck. Roughly a third say there's nothing left to cut.
“Consumers don't pay an inflation rate. They pay today's mortgage or rent, insurance premium, healthcare bill, grocery total, car payment and childcare invoice.”
Vulnerable middle risks falling into distress
Of paycheck-to-paycheck households newly struggling with bills, 81% had previously been keeping up with payments.
Holiday season faces demand borrowed from future
If larger purchases were pulled forward, retailers may face weaker demand as more consumers lose their financial cushion.
The main idea
Retail sales are rising on big-ticket items, but only households with savings can sustain spending as others run out of budget cuts.
