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Lower money anxiety pushes retail sales higher in June

Retail sales excluding automobiles rose 0.4 percent reflecting a decrease in the level of money anxiety among consumers.

July 17, 2014

Retail sales excluding automobiles rose 0.4 percent reflecting a decrease in the level of money anxiety among consumers. Sales growth is evident across multiple sectors with the strongest sales growth observed in health and personal care items, general merchandise stores, clothing stores and non-store retailers. Including automobile, retail sales increased 0.2 percent.

June increase in retail sales comes after an unworthy revised 0.5 percent increase in May mirroring the trend in the Money Anxiety Index showing continued improvement in the level of consumer financial anxiety from 74.0 in April to 71.3 in June.

Employment creation is a significant factor in decreasing the level of money anxiety, according to the report. In the second quarter of this year, the economy added a total of 793,000 non-farm jobs; 288,000 in April, 217,000 in May and 288,000 in June. When job creation increases, consumers feel more secure in their current jobs, or are more encouraged about the prospects of finding a job, which leads to an increase in spending and economic growth.

The Money Anxiety Index measures various economic indicators and factors associated with consumers' level of financial worry and stress. The index is updated in the beginning of each calendar month. It consists of monthly measurement for over 50 years, and spans from January 1959 to date. Historically, the Money Anxiety Index fluctuated from a high of 135.3 during the recession of the early 1980s, to a low of 38.7 in the mid 1960s. The 50-year average is 70.7 (July 1980 = 100). The Money Anxiety Index Is highly predictive: It predicted the arrival of the Great Recession over a year prior to the official declaration of the recession in December of 2007.