Mastercard SpendingPulse: Child Tax Credit Helps Lift U.S. Retail Sales Growth to 10.9%* in July

Rhea-AI Summary

U.S. retail sales rose for the 11th consecutive month in July, according to Mastercard SpendingPulse™. Sales, excluding automotive and gasoline, increased by 10.9% year-over-year, significantly surpassing the average July growth of 2.9% over the last four years. The Child Tax Credit contributed to a boost in spending, particularly in apparel (+80% YOY) and department stores (+44.8% YOY). In-store sales accounted for 81.9% of total retail sales, with a 15.5% YOY increase. Overall, consumer spending reflects a recovery with greater savings and demand.

Positive

• U.S. retail sales increased by 10.9% YOY, marking the 11th consecutive month of growth.
• Apparel and department store sales surged by 80% and 44.8% YOY, respectively, driven by the Child Tax Credit.
• In-store sales made up 81.9% of total retail sales, with a notable 15.5% YOY increase.

Negative

• New home sales have fallen to an 18-month low despite growth in furniture and furnishings.

Retail sales in the U.S. grew for the 11^th consecutive month in July, according to Mastercard SpendingPulse™, which measures in-store and online retail sales across all forms of payment. With more cash in hand—fueled in part by the Child Tax Credit and pent-up savings—consumers drove U.S. retail spending growth, excluding automotive and gasoline, to +10.9% compared to July 2020. This is nearly quadruple the average growth in the month of July**.

(Graphic: Business Wire)

At a national level, back-to-school shopping is well underway, impacting a number of sectors as anticipated in our forecast. Overall, key retail trends from July include:

• Child Tax Credit Boosts Department Stores and Apparel Sales: The first of six monthly Child Tax Credit payments provided parents with an infusion of cash during the peak back-to-school shopping season, with Apparel (+80% YOY) and Department Store (+44.8% YOY) sectors seeing an uptick in sales for the month. This was concentrated in the days immediately following the first distribution on July 15.
• Return of the In-Store Shopper: Brick-and-mortar browsing is making its return, with in-stores sales making up 81.9% of total retail sales (ex auto) for the month. According to Mastercard SpendingPulse, in-store sales were up +15.5% YOY in July and weekends experienced positive spikes in spending as a result of in-store shoppers returning to physical stores.
• Making a House a Home: According to data released by the U.S. Census Bureau, new home sales have fallen to an 18-month low. However, consumers are still eager to turn their houses into homes as the Furniture & Furnishings sector continues to grow on a YOY (+3.2%) and YO2Y (+26.8%) basis.

“While e-commerce continues to play an increasingly significant role for retail, nothing replaces the in-store experience,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “July numbers reflect a return to the store. Consumers are shopping, spending and splurging across channels.”

Mastercard’s chief economist and head of the Mastercard Economics Institute Bricklin Dwyer said, “Back to school shopping is back. Combined with greater savings and higher demand, the Child Tax Credit has provided a boost for families and is putting more money into retailers’ pockets.”

*Excluding auto and gas
**The average year-over-year growth in July over the past four years was 2.9%

About Mastercard SpendingPulse
Mastercard SpendingPulse™ reports on national retail sales across all payment types in select markets around the world. The findings are based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check. As such, SpendingPulse™ insights do not in any way contain, reflect or relate to actual Mastercard operational or financial performance, or specific payment-card-issuer data.

Mastercard SpendingPulse defines “U.S. retail sales” as sales at retailers and food services merchants of all sizes. Sales activity within the services sector (for example, travel services such as airlines and lodging) are not included.

About Mastercard (NYSE:MA)
Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.

www.mastercard.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005340/en/

FAQ

What was the year-over-year growth percentage for U.S. retail sales in July 2023?

U.S. retail sales grew by 10.9% year-over-year in July 2023.

How much did apparel sales increase in July 2023 according to the Mastercard report?

Apparel sales increased by 80% year-over-year in July 2023.

What impact did the Child Tax Credit have on retail spending in July 2023?

The Child Tax Credit boosted retail spending, particularly in apparel and department stores.

What percentage of retail sales were made in-store in July 2023?

In-store sales accounted for 81.9% of total retail sales in July 2023.

What was the trend of in-store sales in July 2023?

In-store sales saw a 15.5% increase year-over-year in July 2023.