After a dip in consumer confidence in June, recent data on consumer spending gains is offering a more positive outlook for the U.S. economy. According to the Department of Commerce, retail sales climbed 0.4% last month, surpassing expectations and marking the third straight monthly increase. The gains were driven by steady demand for automobiles, electronics, and home improvement supplies.

Economists attribute this resilience in spending to stable job growth and a slight cooling of inflation, which has helped support household budgets. Although inflation remains above the Federal Reserve’s 2% target, prices for several consumer goods have moderated since earlier in the year, relieving some pressure on wallets.

Retail and Job Market Show Strength

While the Conference Board reported a 5.4-point drop in consumer confidence to 93.0 in June, other indicators reveal Americans are continuing to shop and invest in large purchases. Notably, vehicle sales rose 1.3% in June after a strong May. Hardware and garden supply retailers also reported higher sales, as homeowners pursued renovation projects delayed during the winter.

The labor market has remained steady, with weekly jobless claims falling by 10,000 to 236,000 for the week ending June 21. California, a bellwether for employment trends, saw a slight drop in new unemployment claims. The resilience in hiring has contributed to the sustained consumer spending gains that are helping offset concerns about economic slowdown.

Wage Growth Supports Demand

Wage growth has also played a role in keeping retail momentum positive. According to the Bureau of Labor Statistics, average hourly earnings increased 0.3% in June, keeping pace with cost-of-living pressures. This consistent wage growth, paired with a strong labor market, has given consumers the ability to maintain spending levels despite headlines warning of tariffs and geopolitical tensions.

Housing Market Shows Signs of Recovery

In the housing sector, mortgage rates have edged lower in recent weeks, boosting interest among potential homebuyers. Mortgage applications rose for the second straight week in late June, suggesting that lower borrowing costs could help revive parts of the housing market that have softened since last year.

Although the number of consumers planning to purchase a home declined slightly in the Conference Board’s survey, the recent drop in rates has renewed optimism among real estate professionals that more buyers could return to the market this summer.

Looking Ahead with Cautious Optimism

Despite the decline in confidence, analysts expect consumer spending gains to continue supporting growth through the summer. Many households have adapted to higher prices by shifting spending priorities rather than cutting back altogether.

“With inflation easing in key categories and employment remaining stable, we’re seeing a pattern where consumers remain engaged,” said Lydia Boussour, senior economist at EY-Parthenon, in a recent note to clients.

While challenges remain, including uncertainty over global trade policy and energy costs, the latest spending figures reinforce that the U.S. economy is still expanding at a modest pace. Businesses in the San Gabriel Valley and across the country are likely to benefit from this steady demand, which supports local employment and investment.

For a detailed look at the latest retail sales and employment reports, visit the Department of Commerce’s economic indicators page at census.gov/economic-indicators.