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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 17 hours ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Concerns grow over CDC's isolation guidelines — Experts warn of more COVID-19 variants after Omicron — WHO recommends 2 new treatments — What "mild" really means when it comes to Omicron.
  2. Vaccines: America's vaccination drive runs out of gas— Puerto Rico expands booster shot requirements— Supreme Court blocks Biden's vaccine mandate for large employers.
  3. Politics: Vivek Murthy calls SCOTUS vaccine mandate block "a setback for public health" — Focus group says Biden weak on COVID response, strong on democracy.
  4. Economy: America's labor shortage is bigger than the pandemic— — CDC COVID guidance for cruise ships to be optional starting Saturday — The cost of testing.
  5. States: America struggles to keep schools open — Youngkin ends mandates for masks in schools and COVID vaccinations for state workers.
  6. World: Beijing reports first local Omicron case weeks before Winter Olympics — Teachers in France stage mass walkout over COVID protocols.
  7. Variant tracker
Dec 24, 2021 - World

Biden to lift travel restrictions on southern African countries

Travelers arrive at Miami International Airport ahead of the long holiday week-end of Memorial Day in Miami on May 26, 2021. Photo: Chandan Khanna/AFP via Getty Images

The White House will lift the travel restrictions it imposed on eight African countries last month after the Omicron variant was first reported in South Africa, White House assistant press secretary Kevin Munoz said on Friday.

Driving the news: The restrictions will end on Dec. 31, according to Munoz. He said the decision to lift travel restrictions was recommended by the Centers for Disease Control and Prevention.

Thousands without power as "hazardous" winter storm lashes East Coast

Satellite imagery of the Northeastern U.S. taken by NOAA on Jan. 17. Photo: NOAA

A major winter storm was lashing much of the East Coast on Sunday, causing widespread power outages and disrupting travel over the holiday weekend.

The latest: The Weather Prediction Center said in a storm summary Monday that winter storm warnings are still in effect for portions of the Central Appalachians, Ohio Valley, interior Mid-Atlantic, and Northeast, while portions of the Central Appalachians and coastal New England are under high wind warnings.