The Commerce Department reports Tuesday that U.S. consumers increased their spending during October, even though the price of goods rose at the fastest rate since 1990s.
Retail sales are a measurement of consumers’ spending on goods across a range from automobiles to sports goods, food, and gasoline. They increased by 1.7% in October, against 0.8% in the preceding month.
The report also shows that sales increased by 1.7% for all products, except autos. Census Bureau advance estimate.
Both numbers are higher than the Dow Jones estimates at 1.5% for headline printing and 1% respectively for core sales growth.
Online shopping saw the largest relative improvement in October, with a 4% increase and a 10.2% rise over a year earlier. Gasoline sales increased 3.9% in October due to rising fuel prices. The annual increase in station sales has been 46.8%.
After the Consumer Price Index, which tracks a comparable basket of goods, rose 0.9% and 6.2% respectively for October, this news was announced. This year-over-year increase was the largest since 1991. The CPI increased 0.6% month-over-month, even excluding energy and food, and was 4.6% annually.
However, the retail sales numbers — which are adjusted for seasonal variations but not for inflation — indicate consumers are willing to pay the higher prices, despite a recent indication that sentiment is at its lowest level in 10 years.
“So much to soft consumer confidence signaling slower economic growth,” stated Ian Shepherdson (chief economist, Pantheon Macroeconomics).
Due to the a variety of Congress payments approved to fight poverty, U.S. households are now flush with cash Covid pandemic crisis. More than $5 trillion was spent. This included direct payments of millions to Americans and increased unemployment benefits. The majority of the transfers expired in September.
In the third quarter of 2013, savings reached $1.6 trillion. This is still a substantial amount, but it’s well below the peak during the pandemic. In sentiment surveys, however, inflation concerns are growing.
Bank of America reports that spending remains robust, though credit card debts and outlays are up 27% in the last two years.
On a year-overyear basis, overall sales increased 16.3%
The month saw an increase in electronics and appliances by 3.8%. Miscellaneous retailers, building material centers, and miscellaneous retail stores rose 2.8% each, and motor vehicle and parts dealers experienced an 1.8% rise.
Restaurant and bar sales were flat in the month, despite an increase of 29.3% over the previous year. Sales at clothing stores were down 0.7%, but they were up 25.8% from 2020.
Separate data released Tuesday by the Labor Department revealed that October’s import price rises were 1.2%, more than expected according to the Dow Jones estimate at 1%. It was the fastest rate of increase since May. It was well in excess of the 0.4% rise that occurred in September.
In October, industrial production was up 1.6%, which is above the 1% estimate. It also rebounded from September’s 1.3% fall. Capacity utilization reached 76.4% in October, the highest since December 2019.
Correction: According to the Census Bureau’s advance estimate, sales increased 1.7% even if autos were excluded. In an earlier version, the percentage had been misrepresented.