U.S. retail sales rose 0.4% on a month in October, a touch higher than Mom’s 0.3% forecast while September’s growth rate was revised up to 0.8% from 0.4%. A significant 1.6% increase in cars was the main factor, but building materials (+0.5%) and restaurants and bars (+0.7%) contributed strongly.
After high bloated prints and moderately increasing comments from Federal Reserve Chairman Powell this week, a batch of decent retail sales figures, but admittedly mixed manufacturing numbers leave the prospect of a December Fed rate cut in balance. The jobs report will be key on December 6, now we stick to the opinion that the reduction is more likely
The “control” group, which excludes volatile elements (the three just listed plus gasoline) and has a better track record of broader consumer spending involving services, was slightly weaker, falling 0.1% from the +0.3% consensus. However, the September growth rate was revised up to +1.2% from +0.7%. The main weaknesses were in furniture (-1.3%), health and personal care (-1.1%), sporting goods (-1.1%) and miscellaneous (-1.6%). All other components were in the range of -0.2% to +0.3%.
The effects of the hurricane and warm weather across the U.S. are likely to have an impact on this report by boosting places to eat and drink and harm furniture and clothing, but the underlying trend remains steady.
The trajectory of the jobs market will determine whether we see a slowdown
In this regard, we know that the top 20% of households by income spend more than the bottom 60% of households by income and 20% in great financial shape.
Monthly US retail sales positively affected the American economy
The latest retail sales figures suggest that the economy is growing rapidly again in the current October-December quarter, after expanding at a strong annual rate of 2.8% in the previous quarter. Since peaking at 9.1% more than two years ago, inflation has fallen to 2.6%, not much higher than pre-pandemic levels. Americans’ net income, on average, exceeded inflation for about 18 months.
However, rising inflation after the pandemic left prices about 20% higher than they were three years ago and weakened Americans’ view of the economy. This was one of the main reasons why Donald Trump was able to capitalize on public discontent with the Biden-Harris administration and regain the White House in last week’s election.
Despite high price levels, Trump inherits an economy characterized by strong spending, strong growth and low unemployment.
Other recent economic reports have also pointed to a healthy economy. In a sign that households, whose purchases drive most of the economy, will continue to spend, the Conference Council’s latest consumer confidence index recorded its biggest monthly gain since 2021. The percentage of consumers expecting a recession in the next twelve months has fallen to its lowest level since the board first asked this question in 2022.
One cautionary note is that grocery store sales barely rose last month, a sign that many Americans may still be struggling to adjust to food prices that are still much higher than they were three years ago.
Lauren Thompson, who was shopping for food this week at Walmart, New Jersey, said she didn’t notice any slowdown in inflation.
Positive outlook for retail sales in November and December
The National Retail Federation expects shoppers to increase their spending in November and December by between 2.5% and 3.5% compared to the same period last year. During the 2023 holiday shopping season, spending rose by a stronger 3.9% over 2022.
Investors and analysts are looking into the 2023 holiday shopping season, with the National Retail Federation predicting a significant increase in shopper spending of between 2.5% and 3.5% compared to the same period last year. The forecast comes at a time when the U.S. economy is experiencing some challenges, including persistent inflation and price pressures, but the data suggests a certain resilience in consumer behavior. During the previous holiday shopping season, a greater rise in spending of 3.9% was recorded than in 2022, reflecting consumers’ ability to adapt to economic conditions.
The effects of the hurricane and warm weather across the U.S. are likely to have an impact on this report by strengthening places to eat and drink and harm furniture and clothing, but the underlying trend remains steady.
This outlook is positive, suggesting that U.S. households are still willing to spend on gifts and consumer goods during the holiday period. This trend may reflect consumers’ desire to enjoy celebrations and social activities, despite economic challenges. Different categories of stores, including e-commerce and traditional retailers, will boost this spending, significantly impacting the overall performance of the economy.
Despite the challenges, the holiday shopping season is an important opportunity for retailers to boost their sales and make profits. Ultimately, this season’s results will show the economy’s resilience to pressure, which could help shape future spending trends.
