High unemployment and economic anxiety will weigh on consumers, keeping sales well below last year's 4.1% gain, Deloitte says.
"A total rewire is necessary to make Harley-Davidson a high-performance company,” CEO Jochen Zeitz says after Harley also reported a surprise loss.
With coronavirus lockdowns starting only in the middle of March, "far worse is to come in April and the second quarter more generally."
“Despite the late start to the holiday season, U.S. consumers were in a festive mood, suggesting the backbone of the economy remains rock solid."
Sales increased 0.7% in July, "a reassuring sign for a U.S. economy that’s facing mounting hurdles."
The measure of consumer spending fell 0.2% after a 1.2% gain in January, signaling tepid economic growth for the first quarter.
The gain in inventories followed a 0.1% drop in March and was fueled by a 0.5% increase in retail inventories after a 0.7% decline the previous month.
The second straight monthly gain indicates consumer spending is picking up after rising only 1.1% in the first quarter.
While sales rose only 0.2% in October, the slowdown from September largely reflected the unwinding of hurricane-related consumer spending.
Sales unexpectedly fell 0.2% last month and economists are trimming GDP growth forecasts for Q3 because of the effects of Hurricane Harvey.
The July sales report supports expectations that the U.S. economy will continue on its modest growth path.
The March sales report is another sign that consumers “have retrenched a bit in terms of spending in recent months."
