As the holiday season approaches, Americans are not shying away from opening their wallets, demonstrating resilience in consumer spending that continues to bolster the economy. According to data released by the U.S. Commerce Department, retail sales in October saw a 0.4% increase from September, signaling a steady though slightly slower growth compared to the previous month’s 0.8% gain. Automobile dealers, in particular, witnessed a significant surge with sales rising 1.6%, while electronics and appliance stores enjoyed a 2.3% climb, and dining establishments noticed a 0.7% uptick, asreported by the Chicago Sun-Times.
Despite recent hurricanes contributing to a dip in sales in sectors such as furniture, clothing, and drug stores, home and garden stores experienced growth, likely due to rebuilding after the storms. Tim Quinlan, an economist at Wells Fargo, observed that the moderation in the pace of price growth is “allowing consumers to ratchet up spending,” underscoring that spending in bars and restaurants is outpacing price increases, according to a statement obtained by the Sun-Times. However, the cautious note was the barely increased sales in grocery stores, indicating that many Americans might still be grappling with food prices markedly higher than they were three years prior.
Highlighting Americans’ economic confidence, recent figures suggest robust growth for the October-December quarter, with consumer confidence indices reflecting optimism and a declining expectation of a recession. Post-pandemic, Americans have seen an approximate 20% increase in prices over the past three years, a factor contributing to the political shift witnessed in the recent presidential election where Donald Trump emerged triumphant. According to theAssociated Press, President Trump inherits an economy characterized by robust spending, solid growth, and historically low unemployment despite the high price levels that persist.
Consumers are expected to sustain this momentum into the holiday season, with predictions from the National Retail Federation pointing towards a 2.5% to 3.5% rise in spending during November and December compared to a year ago, as stated by the Associated Press. This outlook is vindicated by companies like Affirm, a buy-now, pay-later firm, which has seen its consumer base grow considerably due to a trend towards online installment loans. “Everything we see suggests the consumer feels like they want to be out spending,” Michael Linford, Affirm’s chief operating officer, indicated in an interview with theAssociated Press.
Eyeing this consumer behavior, analysts are keen to dissect upcoming quarterly results from retail giants such as Walmart and Target to further understand shopper habits amid persistent inflation. Home Depot, one of the early reporters of fiscal third-quarter earnings, hinted at continued pressure on spending but managed to outperform market expectations, as informed by their CEO, Edward Decker to the Chicago Sun-Times. Decker mentioned the potential challenge of President Trump’s proposed high tariffs on imports but reassured that a significant portion of Home Depot’s goods are sourced domestically and from within North America.
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