Retail sales are a measure of the value of purchases made by consumers from retailers for consumer goods and services. They are a major driver of the economy, making up more than two-thirds of gross domestic product (GDP). Retail sales also serve as a proxy for consumer spending, which is a critical driver of economic growth. As such, they are closely watched by both business and investors.
The retail sales report, compiled monthly by the Census Bureau, is an important indicator of consumer demand and spending. The data is collected from a wide variety of sources, including supermarkets, department stores, specialty stores, and other general merchandise retailers. The figures are then modeled to represent national trends. The data is subject to revisions as more accurate information becomes available.
Several factors drive retail sales, including consumer confidence, employment and income levels, and seasonal or cyclical fluctuations. High consumer confidence typically leads to increased spending on discretionary items like electronics and luxury goods. Conversely, low consumer confidence may lead to reduced spending as consumers prioritize necessities like groceries and utilities.
Other factors influencing retail sales include the holiday season, which usually sees a jump in consumer spending on things like gifts and decorations. Moreover, the back-to-school period is another important peak shopping time, as families purchase school supplies and electronic devices to prepare for the new academic year. In addition, retail sales are also impacted by inflation. Higher inflation tends to reduce consumer purchasing power by making it more expensive to buy the same item, which in turn lowers retail sales.
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