Retail: Americans are still shopping

This is good news for retailers heading into the holiday season, as well as for the economy as a whole, which is running on consumer consumption.

Adjusted for seasonal fluctuations, U.S. retail sales rose 1.7% in October compared to the previous month, the Census Bureau reported Tuesday. It was more than economists expected, more than the rise in September, and the biggest jump since March, when government stimulus fueled consumer spending.

Excluding cars, car parts and consumption at petrol stations, retail sales still rose 1.4% last month.

“We certainly see a consumer who has a strong balance. We see consumption levels higher. We see that demand is higher,” he said. Walmart (WMT) That’s what US CEO John Furner said during the company’s earnings call on Tuesday.

But the long period of high demand has also stretched already strained supply chains, resulting in sold-out items and higher prices, Walmart CEO Doug McMillon added.

And even though people have money to spend, rising inflation is weighing on the mood: Last week, the University of Michigan’s consumer sentiment index, which provided an early insight into how U.S. consumers felt in November, fell to its lowest level in a decade.
This trend is also visible in the strong retail sales data from October, said economists Tim Quinlan and Shannon Seery from Wells Fargo (WFC).

“If the price gain exceeds consumption increases, it implies a decrease in volume. For example, petrol sales increased by 3.9%, although the fact that motor fuel prices rose 6.1% suggests that consumers may have started to combine trips or otherwise restrict their driving. ” they said in a note to customers comparing Tuesday’s retail sales data with inflation data.

Similarly, spending on restaurants was flat last month, but data on consumer price inflation tell us that prices for eating out in restaurants rose 0.8%.

“Consumers are still going out to eat, but perhaps some diners are moving down the price curve from upscale dining experiences with full service to more humble quick relaxed options,” Quinlan and Seery said.

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