Sales at U.S. retailers rebounded in June as Americans flocked to bars and restaurants and bought the latest summer fashions, pointing to an accelerating U.S. economy.  Retail sales increased 0.6% last month in a much better showing than Wall Street had expected.  Retail sales are now up 18% in the past year and easily exceed pre-pandemic levels.   The biggest change is what Americans are spending their money on. Households are still buying plenty of goods, but they have shifted their spending toward services they avoided during the pandemic. Dining out, entertainment, travel, and vacations. 

U.S. consumer sentiment unexpectedly declined to a five-month low in early July as mounting concerns over rising prices led to a sharp deterioration in buying conditions for big-ticket items. The University of Michigan’s preliminary sentiment index decreased to 80.8 in July from 85.5 the prior month.  Consumers expect inflation to rise 4.8% over the next year, the highest since August 2008.

U.S. business inventories increased solidly in May, but shortages of goods like motor vehicles are making it harder for retailers to restock warehouses to meet booming demand.  Business inventories rose 0.5% after edging up 0.1% in April. Inventories are a key component of gross domestic product. Inventories increased 4.5% on a year-on-year basis in May.