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The Commerce Department reported a somewhat disappointing report on retail spending for July earlier this morning, as that government agency affirmed that such spending rose by a modest 0.2% last month. That was a tad less than the expected increase of 0.3%.

However, not all the news was disquieting, as retail spending, excluding the auto component, gained a solid 0.5% for the month. (Note that the number backing out motor vehicle and parts activity is known as the core rate of retail sales.) The aggregate 0.2% increase, meanwhile, was notably less than the 0.6% uptick tallied in June. At that time, though, the gain was largely auto driven, as the so-called core rate of retail spending rose just 0.1% that month.

Meanwhile, there was some very good news in the report, namely the fact that overall retailing activity rose 5.4% from a year earlier. Moreover, in July, consumers stepped up their spending on such items as meals, clothing, and sporting goods. Also, department store sales jumped by their fastest pace in more than a year last month.

Still, the overall sales increase was modest, at 0.2%, and likely reflects the hesitation on the part of some Americans to spend aggressively in the wake of the continuing sluggish rate of job creation, stagnant wages, and the higher taxes that went into effect in January, when the partial payroll tax holiday ended after being in effect for two years.

On the whole, though, consumers continue to support the economy's tepid recovery. But while such spending is clearly welcome and supportive, it also is true that compared with prior business comebacks, this one is not being fueled all that strongly by retail activity. This last point is critical, as the economy is increasingly relying on households to fuel growth, as other potential drivers, such as government and business spending, remain comparatively weak.

Taken as a whole, this report was not a game changer, and suggests that our expectation of roughly 2% growth for the final six months of this year is probably not going to change in the near term.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.