Retail sales up solidly in October as Americans showed continued willingness to spend
WASHINGTON — Americans stepped up their spending at retailers last month in the latest sign that well customer spending is driving the economy’s steady growth.
Retail sales rose 0.4% from September to October, the Commerce Department said Friday, a solid boost though less than the previous month’s robust 0.8% boost.
A 1.6% jump in sales at auto dealers drove much of the boost. Purchases climbed 2.3% at electronics and appliances stores and 0.7% at restaurants and bars. Though some of October’s rise in retail sales reflected higher prices, it mainly indicated increased purchases.
Sales in some categories fell — furniture stores, clothing outlets and drug stores, among them — though economists said that weakness likely resulted, at least in part, from last month’s hurricanes. Sales at home and garden stores rose, potentially reflecting rebuilding activity after the storms.
“The moderation in the pace of worth growth is allowing consumers to ratchet up spending,” said Tim Quinlan, an economist at Wells Fargo. “People may not adore how much it costs to leave out to eat, but their bar and restaurant spending is growing faster than prices are.”
Friday’s update arrives as retailers are poised to enter the critically significant holiday shopping period in less than two weeks. Analysts envision a solid holiday shopping period, though perhaps not as robust as last year’s, with many shoppers under pressure from overall still-high prices despite the easing of expense boost.
The latest retail sales figures recommend that the economy is growing briskly again in the current October-December quarter, after having expanded at a sturdy 2.8% annual rate in the previous quarter. Since peaking at 9.1% more than two years ago, expense boost has sunk to 2.6%, not far above pre-pandemic levels. And Americans’ receive-home pay, on average, has surpassed expense boost for about 18 months.
Still, the post-pandemic expense boost spike has left prices about 20% higher than they were three years ago and dimmed Americans’ outlook on the economy. That was a key rationale why Donald Trump was able to capitalize on community discontent with the Biden-Harris administration and recapture the White House in last week’s election.
Despite high worth levels, though, Trump inherits an economy in which spending is powerful, growth is solid and unemployment low.
Other recent economic reports have also pointed to a well economy. In a sign that households, whose purchases drive most of the economy, will continue spending, the Conference Board’s most recent customer confidence index posted its biggest monthly boost since 2021. The proportion of consumers who expect a decline in the next 12 months dropped to its lowest point since the board first posed that 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.
Lorraine Thompson, who was food shopping this week at a Walmart in Secaucus, recent Jersey, said she’s not noticing any slowdown in expense boost.
“Everything is high,” she said. “The meat, the cheese.”
Thompson said she’s been buying less cheese and has been food shopping more at Walmart because she thinks the prices there are lower than at other supermarkets.
The National Retail Federation has predicted that shoppers will boost their spending in November and December by between 2.5% and 3.5% over the same period a year ago. During the 2023 holiday shopping period, spending had surged by a stronger 3.9% from 2022.
Some retailers declare they expect consumers to spend more freely in the coming months. Affirm, a buy-now, pay-later corporation that has been expanding as more consumers seek online installment loans, last week reported that growth in its energetic consumers accelerated for a third straight quarter to nearly 20 million.
“Everything we view suggests the customer feels like they desire to be out spending,” Michael Linford, Affirm’s chief operating officer, told The Associated Press.
Analysts will be dissecting quarterly results next week from Walmart and Target, among others, to gauge how shoppers are navigating still-high prices and to assess their mood after a presidential race that pivoted in large part on voters’ discontent with the economy.
One of the first major retailers to update financial third quarter profits was Home Depot, which continues to grapple with a pullback in spending from customers. But the retrenchment was less severe than in the history, and its act beat Wall Street’s expectations.
Home Depot’s CEO Edward Decker said that Trump’s proposed high tariffs on imports, if implemented, would intensify pressure on the corporation. But he added that Home Depot sources well more than half its goods domestically and elsewhere in North America.
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D’Innocenzio reported from recent York.
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