The Coresight Research model for retail in the United States indicates deceleration in sales growth from 5.2% in July to 4.6% in August compared to the same periods in 2023.
Despite the deceleration, the market researcher is predicting stronger retail sales growth through the rest of 2024 and into the first half of 2025, with gains generally remaining in the mid-single-digit percentage range over that period.
In developing its forecasts, Coresight looked at the unemployment rate, which increased by 0.8 percentage points in July year over year to 4.3%, as well as the labor force participation rate, which came in at 62.7%, up 0.1 percentage point. Average weekly wages grew 3.3% year over year, while the increase in the Consumer Price Index fell to 2.9% from 3% in July, meaning year-over-year growth in average weekly wages surpassed inflation during the month.
In addition, Coresight points out disposable income grew by 0.5% in June from the 2023 month, yet, in August, consumer sentiment slid 1.6 points year over year to 67.8, although reading still represented a brief improvement compared to recent months.
Based on the latest available data, Coresight maintained housing prices increased by 5.9% year over year in May 2024. In June, existing home sales dropped by 5.4% year over year, while new home sales declined by 7.4%. In July, housing starts declined by 16% year over year.
As the year has developed, Coresight stated it anticipates 2024 to represent a transition year from a weaker, inflation-impacted economy to greater resilience amid low inflation and reduced interest rates, but the transition continues to prove slower than has been expected. Overall, inflation has remained around 3% and expected cuts to interest rates have yet to arrive, which affects the current housing market and consumers’ ability and need to spend. Despite rising prices, existing home sales are down year over year, resulting in softer demand for big-ticket items. Although consumers still are spending, they are doing so selectively. As such, a big-ticket recovery remains largely dependent on the housing market, Coresight noted.
