Retail sales surged by 1.3% in October as consumers continue to spend despite inflation


Minneapolis
CNN Business

American consumers stayed more in October, showing continued stability despite persistent inflation and an early start to the holiday shopping season.

US retail rose 1.3% in October, the Census Bureau said Wednesday.

That was the biggest monthly gain since February and better than the 1% economists had expected. Consumer spending flat in September.

Retail sales, which are not adjusted for inflation, were up 8.3% for the 12 months ending in October, slightly down on September 8.6%.

Consumer spending increased on items such as gas, groceries, furniture and cars, but shoppers stopped spending on electronics at appliance stores, sports retailers and department stores. , according to the report.

For years, despite short-term increases in gas prices and multi-decade inflation, consumer spending has remained strong.

October Business Report showing the desire not to drive back that is The economic crisis remains strong, said Eugenio Aleman, chief economist of Raymond James.

“The fact that they’ve had a limited supply chain in the past, almost three years, is having a big impact on consumers’ decision to continue spending,” Aleman said. said.

Also Read :  Aaron Carter, singer, dead at 34

But to cover the expenses, which started to demand for experiences and goods, consumers have relied on debt. The New York Federal Reserve reported on Tuesday that consumer credit card balances grew by 15% year over year in the third quarter – the highest in more than 20 years.

But as the central bank raises interest rates in its efforts to lower interest rates The increase in prices is difficult, which affects consumers, said Gregory Daco, chief economist for EY Parthenon. Consumer sentiment has fallen in recent months.

“It is becoming increasingly clear that family budgets are stretched by persistent inflation, forcing many people to invest in their savings and use credit to pay bills,” he said. wrote on Wednesday. “And this is not sustainable, especially for families at the lower to middle end of the income spectrum. As a result, while total savings are still hovering around $1.5 billion, we expect to soon see a significant pullback in consumer spending below. high inflation and high interest rates.

Also Read :  7 Ways To Maximize The Benefit Of Your Business Coach

Still, the strength of consumer spending, although good for the economy, may pose a challenge for the Fed.

“Even after adjusting for inflation, consumers are spending more,” Wells Fargo economists Tim Quinlan and Shannon Seery wrote in a note. “It is desirable to be happy with the ‘stability’ of consumers, but the constant power of spending gives every company an incentive to forego price increases, thus making the task of finding financial value is difficult for policymakers.”

October’s trade report comes amid a flurry of economic reports from those in the stock market ahead of the holiday season.

Two important gauges, the Consumer Price Index and the Producer Price Index both showed cooling inflation.

Scott Brave, head of economic research at Morning Consult, said, “The gains from the level in October that we saw in last week’s CPI report extended to this morning’s retail prices.

Also Read :  AMC Entertainment (AMC) earnings Q3 2022

Although inflation appears to be rising, consumer behavior has changed, Claire Tassin, Morning Consult’s retail and e-commerce analyst, said during an interview Wednesday.

“Everybody has had a price hike lately,” he told Christine Rome, a business reporter for CNN Business. “People are really changing the stores they shop at, so I can see affluent shoppers shopping at Walmart more often, especially … to get some of the lower prices.” maybe in other stores where they do business traditionally.”

On Tuesday, Walmart said that US sales increased 8.2% last quarter from a year ago. The discount retailer said it was getting “strong inventory,” including from high-net-worth households.

However, earlier Wednesday, Target said its profits fell 52% last quarter and revenue rose just 3.4% as shoppers began to feel the heat from inflation. The retailer warned of a sluggish holiday season ahead as shoppers held back sales.

Source

Leave a Reply

Your email address will not be published.

Related Articles

Back to top button