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

Retail sales in the U.S. grew for the 11th 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**.

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%