July was another robust month for US retail. Overall sales advanced by 5.2 per cent, although on a volume basis this equates to a 1.6 per cent uplift as inflation continues to run hot across most of the retail sector.

However, that’s still not bad as volumes remain far ahead of where they were last year.

It is also worth noting the impact of gas prices on these numbers. If you remove gas station sales, overall sales rose by 4.3 per cent. So, higher gasoline prices contributed almost a percentage point to growth. This represents a sharp price increase, and it is something that causes concern and annoyance for the American consumer, but they are still taking it in stride.

Core retail – which excludes auto, foodservice and gas – increased by 4.7 per cent or by 1.3 per cent on a volume basis. Again, this is resilient and shows that consumers are still largely happy to open their wallets.

Both growth numbers are sharply down from last month, mainly because June was a period of big deals focused on Amazon’s Prime Day and various other retailer initiatives. This is to be expected and is not a cause for alarm.

There is a legitimate question as to how such strong growth is being produced at a time when Americans feel relatively gloomy about the economy and are still broadly dissatisfied about the cost of living. Some of this, of course, is funded by a modest increase in debt – which mostly comes through increased credit card balances. Unreported financial mechanisms, like buy-now-pay-later, are also rising sharply.

However, some is also being funded by a modest rise in real disposable income, which a lot of consumers seem to be directing straight into spending rather than saving. Indeed, the savings ratio has fallen again in recent months. This may seem contradictory when set against a more cautious mindset but, from our research, we also see an increasing attitude of throwing caution to the wind.

These dynamics suggest that while the levels of increase may not be sustained over the balance of this year and into next year, they are not entirely based on shaky foundations. It will likely take a more general and wider economic shock – which still cannot be discounted – to blow the consumer firmly off course.

On a category basis, apparel stores and sporting goods stores were two of the standout areas (+5.4 per cent and +11 per cent growth, respectively). Looking into our consumer tracking, this makes sense. We saw back-to-school purchases really start to kick in during July. There was, interestingly, also a spike in the purchase of outfits and outdoor products for the big 250th Fourth of July celebration.

Over at food and beverage stores, sales increased by 1.7 per cent. This is a reasonable uplift, especially as inflation is currently running a bit lower in grocery due to price competition across the sector. The Fourth of July holiday provided a good uplift over the prior year as more households engaged in celebrations and indulgences.

Furnishings stores remain the laggard of the sector with a -0.1 per cent shrink in sales reported. We remain skeptical over this number as the actual reporting from retailers points to a much stronger performance. But, even so, it remains reasonable that some of the bigger-ticket categories are under pressure because of an unwillingness to finance purchases, a sluggish housing market, and some worry over spending large sums of money.

Looking ahead, the outlook for the remainder of the second half and the important holiday period looks solid. Consumers are picky, choosy and finicky – but they’re also determined and very reluctant to reduce their quality of living by curtailing spending on both the things they need and the things they want.