Economic security

Americans are spending like crazy. Can the good times last?


1. Shop until you drop: The economy is booming because unemployment is low and people are spending more of their paychecks at Walmart, Macy's, Home Depot and a bunch of other retailers that report earnings this week.

Consumer spending accounts for more than two-thirds of the American economy, and there's no better indicator for how much people are shopping than the financial health of stores.

On Wednesday, the US government will report retail sales for July. The Commerce Department said consumer spending grew at a 4% pace in the second quarter, and May and June were particularly strong. Wall Street analysts expect retail sales remained solid in July, even though consumer sentiment dipped a bit.

Investors will pay particularly close attention to retailers' outlooks for the rest of the year to gauge how robustly consumers are expected to spend through the holidays. Higher inflation is beginning to eat into people's paychecks. Wage growth has remained tepid, yet gas prices are rising, and tariffs have boosted prices on everything from cars to soda.