Fourth quarter looking good for small, independent retailers

The latest retail sales report from the government augurs well for small and independent retailers for the fourth quarter, with one possible snag: the impact of trade tariffs.

Overall retail sales rose 6.4 percent in July from a year ago, and sales from non-store retailers, which include online merchants, soared nearly 9 percent, according to the Commerce Department.

Sales at stores that specialize in merchandise like clothing, electronics, furniture and home furnishings also had healthy gains, between 3.5 percent and 6.4 percent. Because small retailers tend to focus on one category of merchandise — for example, clothing or sporting goods — the solid numbers in the report portended especially well for them.

With the end of the year the busiest time of year for many retailers, consumers' willingness to spend freely during the summer is cause for optimism.

"This suggests the U.S. economy started the third quarter on solid footing after recording its best performance in nearly four years in the second quarter," Bank of the West Chief Economist Scott Anderson said in a note to the bank's clients.

The National Retail Federation, the trade group that represents retailers of all sizes, was equally upbeat about the July numbers. At the same time, the NRF was wary about the possibility that trade tariffs imposed by the U.S. against China, Canada, Mexico, India, Turkey and European countries and those nation's retaliatory taxes would in time hurt consumer spending.

"If they escalate, they will no doubt weigh on confidence and household spending," NRF Chief Economist Jack Kleinhenz said of the tariffs.

The Trump administration has already imposed tariffs of up to 25 percent on steel and aluminum imports and thousands of other items, and it is threatening tariffs on more goods, including Christmas lights, handbags, hats and furniture. Many importers and retailers expect to have to pass the higher prices on to consumers.

Retaliatory tariffs also raise fears that U.S. manufacturers won't be able to sell as much of their exports overseas, hurting their revenue.

Still, with the national unemployment rate at 3.9 percent, many consumers are upbeat because they're working and because the labor market is in their favor. The Commerce Department said restaurant and bar sales were up nearly 10 percent from a year ago; when consumers are eating out, they're feeling good about their finances and spending.

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Follow Joyce Rosenberg at www.twitter.com/JoyceMRosenberg . Her work can be found here: https://apnews.com/search/joyce%20rosenberg