Retail sales up 1.7 percent in October, beating expectations
Retail sales jumped 1.7 percent in October, according to data released Tuesday by the Census Bureau, beating expectations and rising for the third straight month.
U.S. retailers, restaurants and bars made $638.2 billion in sales last month without adjusting for inflation, up from $627.5 billion in September. Analysts expected a 1.4 percent increase from September, which saw sales grow 0.8 percent from August, according to revised figures released Tuesday.
The surprisingly strong month of retail sales is a promising sign for the U.S. economy amid high inflation and plummeting consumer confidence. While the labor market, wage growth, stock market and consumer spending have all held steady this fall, a 30-year high in consumer price growth has strained household budgets and turned public opinion against President Biden’s handling of the economy.
Even so, the persistence of strong retail sales growth shows a willingness among consumers to power through what economists expect to be a temporary surge in inflation.
“Consumers remain in high gear moving into the last months of the year. While it’s difficult to parse out exact amounts, the figures reflect the combined effects of Halloween and early holiday shopping,” said Jack Kleinhenz, chief economist at the National Retail Federation, in a Tuesday analysis.
“Even though consumers may have begun shopping early to avoid inventory shortages, November and December are still when they do most of their holiday shopping, so much remains ahead of us.”
The sharp rebound in consumer demand from the depths of the pandemic, particularly for goods, has overwhelmed factories, shipping and trucking companies, and retailers still recovering from COVID-19 driven losses. The emergence of the delta variant also shifted more consumer spending toward goods in high demand while also slowing the flow of products and parts — each fueling already rising prices.
“Consumers continue to spend more on goods than services, a shift that began with the pandemic. Halloween, the second-largest consumer holiday of the year, provided a boost to spending; even big-box stores reported gains,” explained Yelena Maleyev, economist at Grant Thornton.
“Those gains likely came at the expense of the service sector,” she added.
“Spending at restaurants and bars was flat for the month. The hospitality industry has been hit especially hard by labor shortages, with many restaurants forced to cut their opening hours and run shifts with skeleton crews. Some even report having to cancel or move reservations.”
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