US Retail Sales Rise in October, Signaling Continued Consumer Strength
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Americans increased their spending at retail stores in October, indicating sustained consumer demand and driving steady economic growth, reports The Associated Press.
Retail sales rose 0.4% from September to October, according to the Commerce Department's Friday report. While this represents a moderation from September's robust 0.8% increase, the overall growth remains significant.
A notable contributor to the October increase was a 1.6% jump in auto dealer sales. Purchases also climbed 2.3% at electronics and appliances stores and 0.7% at restaurants and bars. Economists suggest that while some of this increase reflects higher prices, the primary driver was increased consumer purchasing.
Sales declined in certain categories, including furniture, clothing, and drug stores, with economists attributing this weakness at least partly to last month's hurricanes. Sales at home and garden stores, however, increased, potentially reflecting post-storm rebuilding efforts.
"The moderation in the pace of price growth is allowing consumers to ratchet up spending," noted Tim Quinlan, an economist at Wells Fargo, to . "People may not love how much it costs to go out to eat, but their bar and restaurant spending is growing faster than prices are."
The latest retail sales figures indicate brisk economic growth in the current October-December quarter, following a strong 2.8% annualized expansion in the previous quarter. Inflation, while still elevated at 2.6%, is significantly down from its peak of 9.1% more than two years ago and is approaching pre-pandemic levels. Importantly, average American take-home pay has exceeded inflation for approximately 18 months.
Despite these positive economic indicators, high price levels, roughly 20% higher than three years ago, have dampened consumer sentiment. This contributed to Donald Trump's electoral success, capitalizing on public dissatisfaction with the previous administration's handling of the economy.
However, Trump inherits a strong economy characterized by robust spending, solid growth, and low unemployment. Recent economic reports, including a substantial increase in the Conference Board's consumer confidence index and a decline in recession expectations, further support the positive economic outlook.
One area of concern is the minimal increase in grocery store sales last month, suggesting that many Americans are still grappling with elevated food prices.
The National Retail Federation anticipates a solid, though potentially less robust than last year, holiday shopping season, with spending projected to rise 2.5% to 3.5% year-over-year. Some retailers, such as Affirm, a buy-now, pay-later company, report accelerating consumer spending, indicating confidence in the coming months.
"Everything we see suggests the consumer feels like they want to be out spending," said Michael Linford, Affirm's chief operating officer, to The Associated Press.
Analysts will closely scrutinize upcoming quarterly results from major retailers like Walmart and Target to assess consumer behavior and sentiment in light of the recent presidential election and persistent high prices. Home Depot, one of the first retailers to report fiscal third-quarter earnings, showed a less severe pullback in spending than previously observed, exceeding Wall Street expectations. However, Home Depot’s CEO warned that Trump's proposed tariffs could further pressure the company.