America’s Spending Boom Might Get Less Top Heavy

Americans still have their wallets open. But what matters most to marketers as the holiday shopping season begins is what people decide to spend their money on, and where.

The Commerce Department on Wednesday reported that retail sales rose 1.3% in October from September, putting them 8.3% above their level for the first year. That’s modestly more than the 7.7% annual gain in consumer prices reported by the Labor Department over the same period, so—with the caveat that retail sales represent only a fraction of the spending basket consumer price data is based on it. it looks like sellers sold less on an inflation-adjusted basis than a year earlier.

In addition, sales other than car dealerships, gas stations, hardware stores, and food and beverage services—the “control” sales that economists look to help account for the product domestic – rose 0.7% in October from September. updated for the last two months. That raised economists’ estimates of where fourth-quarter GDP would reach.

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However, not all sellers are profitable. Sales at electronics and hardware stores, which had been growing last year, were down 12.1% from last October. Retail prices were down 1.6%. Sales of furniture and home furnishing stores, and in the category that includes sporting goods stores, hobby stores and the like, were moderately high, making them decrease in variable inflation rates.

In 2021, officials thought the high price would be temporary. But a year later, it was still close to a four-decade high. The WSJ’s Jon Hilsenrath explains three factors that have kept inflation at bay for longer than expected. Illustration: Jacob Reynolds

Meanwhile, sales of food and beverage services were up 14.1% from last year – an indication of how people are continuing to shift money away from the goods they own. saved during the epidemic to the service units. Sales at hardware stores rose 9.2%. In its earnings call on Tuesday, Home Depot noted that while the housing market has slowed significantly, it continues to see strong demand for home improvement.

Changes in consumer preferences come on top of changing economic conditions. Inflation is high, but appears to be cooling. The overall labor market looks strong, but it doesn’t appear to be as tight as it was a few months ago, which could limit wage gains.

The high-profile layoffs at tech companies like Twitter and Facebook-parent Meta Platforms account for a tiny fraction of total U.S. jobs, but many of those workers make more than the average wage. , and that can weigh on spending money in stores. cater to high income customers.

The same goes for the steep drop in stock prices, as the rich have more wealth than middle- and low-income Americans.

That creates a dynamic that looks good for stores like Walmart,

which on Tuesday reported top results in the estimates. The major retailer said that a third of the grocery market share it gained last quarter came from households making more than $100,000 in annual income—an indication that more affluent consumers are want to make a living.

For traders who work for the rich – or worse, for people who until recently have been profiting from crypto – the holidays may not be so pleasant.

Email Justin Lahart at [email protected]

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