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Data: FRED; Chart: Axios Visuals

Consumers defied expectations and shopped at an increasing rate amid a resurgence in COVID-19 cases.

Why it matters: Several measures of consumer confidence fell sharply in August, suggesting consumer spending could fall during the month. In fact, concerns about the Delta variant's impact on the economy had prominent Wall Street economists cutting their expectations for Q3 GDP growth.

Yes, but: Retail sales in August unexpectedly rose 0.7% month over month. Economists were expecting a 0.7% decline.

By the numbers: Excluding autos and gas, sales jumped by 2% to $448 billion. Economists were expecting no growth in this metric.

  • Leading the way was online retail, which jumped 5.3%. Furniture and home furnishings sales climbed by 3.7%. Department store sales rose by 2.4%.
  • On the weak side, motor vehicles and parts sales fell 3.6%. Electronics and appliances sales declined by 3.1%. It’s worth noting that these are both categories that have been affected by chip shortages.

What they’re saying: “Confidence may have plunged, but rising incomes, employment and accumulated savings mean that people continue to spend,” ING chief international economist James Knightley said.

  • “Upside surprises on this scale don’t come often, and this one indicates a real degree of resilience on the part of consumers,” Pantheon Macroeconomics chief economist Ian Shepherdson noted.

Between the lines: On one hand, low inventories due to supply chain issues may have limited some retailers' sales. On the other hand, expectations for shortages and the desire to avoid crowds may be pulling forward some holiday sales.

  • According to a CreditCards.com survey flagged by CNBC, 13% of shoppers planned to begin their holiday shopping as early as August because of these reasons.

Threat level: “Data on the worst effects tied to the spread of the Delta variant and disruptions from Hurricane Ida are still ahead of us,” Grant Thornton chief economist Diane Swonk said.

  • “This is at the same time that the additional support to unemployment insurance for millions has expired. We are poised to eke out a very modest gain for consumer spending during the quarter.”

The bottom line: Consumers have proven incredibly resilient, sending retail sales well above pre-pandemic levels.

  • While risks to spending linger, consumers continue to have the capacity to spend at a rising clip. More on that later in this newsletter.

Go deeper

Updated Oct 21, 2021 - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Vaccines: Pfizer booster has 95.6% efficacy, large study shows — FDA authorizes mix-and-match for booster shots — J&J expects $2.5 billion of vaccine sales this year.
  2. Health: Cases and deaths keep falling — White House unveils plan to "quickly" vaccinate kids ages 5-11 — The global coronavirus vaccine gap — Gates Foundation to send $120 million of antiviral pills to lower-income countries.
  3. Politics: Reports: Brazil leader to be accused of crimes against humanity over COVID — Puerto Rico leads U.S. vaccination rates — Hawaii invites fully vaccinated travelers to return from Nov. 1.
  4. Education: Education secretary reveals limits to Biden’s mask push on states — LA extends deadline for school employee vaccinations — Parent sues Wisconsin school district after child tests positive.
  5. Variant tracker: Where different strains are spreading.

Hawaii invites fully vaccinated travelers to return from Nov. 1

Hawaii Gov. David Ige. Photo: Darryl Oumi/Getty Images

Hawaii Gov. David Ige (D) announced plans Wednesday to soon welcome back nonresidents to the island state who are fully vaccinated against COVID-19 for nonessential travel.

Why it matters: Hawaii's tourist-dependent labor market suffered one of the worst blows in the U.S. last year and the state's climb out of its pandemic-sized hole is moving slowly, Axios' Courtenay Brown notes.

Oct 21, 2021 - Health

India crosses 1 billion COVID vaccinations milestone

A health worker inoculates a COVID-19 vaccine dose to a man wearing a face mask of Prime Minister Narendra Modi in Beawar, India, in September. Photo: Sumit Saraswat/Pacific Press/LightRocket via Getty Images

India's Prime Minister Narendra Modi announced Thursday that the country's health workers have now administered more than 1 billion COVID-19 vaccines doses.

Of note: While this is a significant milestone for the country of 1.4 billion, which has been devastated by the coronavirus, only about 30% of the eligible population has been fully vaccinated against the virus, per AP. Roughly 75% have received at least one dose.