Economic Watch: Affluent Consumers Drive U.S. Retail Sales Surge as Lower Income Households Struggle, Experts Say

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Windhoek: Affluent Americans are driving a surge in U.S. retail sales, while lower-income households continue to struggle with inflation, experts said. U.S. retail sales rose 1.2 percent in August to 773.9 billion U.S. dollars, up 6 percent from a year earlier, according to data released by the Census Bureau earlier this week. Experts said the increase likely reflects stronger spending among affluent consumers, highlighting a widening gap between higher- and lower-income Americans.According to Namibia Press Agency, "If you take the last two months together, (retail sales are) still a decent pace, but likely driven by higher-income people," Dean Baker, economist and co-founder of the Center for Economic and Policy Research, told Xinhua. Some experts noted that high earners, supported by gains in stocks and real estate, continue to spend on travel, luxury goods and apparel, while lower-income Americans are struggling to keep up as everyday essentials consume much of their income gains."The cost of living is going up, but wealthy individuals still are traveling and making big purchases. That is keeping retail sales up even while the overall economy is not doing well for many individuals," Brookings Institution Senior Fellow Darrell West told Xinhua. Economists warned that this lopsided economy could leave the retail industry vulnerable. If top-tier consumer spending cools, retail sales could contract.Some observed that consumers are increasing their spending simply because inflation has made essential items more expensive. "People in all income groups need to buy their essentials. As inflation drives up prices, people are increasing their spending in one sense -- buying the same items they need at higher prices," said Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland.While the U.S. administration campaigned on bringing down inflation, prices have shown little sign of easing. Moreover, the conflict with Iran is contributing to high gas prices, placing additional pressure on lower-income Americans. Some experts believed this could hurt the Republican Party, which currently holds majorities in both chambers of the U.S. Congress, in the upcoming midterm elections. "Public opinion surveys show two-thirds of Americans are not doing well financially," West said. "The fact that many people continue to struggle poses problems for Republicans in November."