Americans showed their steadfast resilience and kept spending online, at restaurants and other outlets in September even as they grappled with higher prices, interest rates and a host of other headwinds piling up. Retail sales rose 0.7% in September, more than twice what economists had expected, and close to a revised 0.8% bump in August, the Commerce Department reported Tuesday. Retail sales in August were inflated after gasoline prices spiked, however. That was not the case in September when gas prices began to ease.
The Associated Press has the story:
Retail sales rise solid 0.7% in September despite high prices
Newslooks- NEW YORK (AP)
Americans showed their steadfast resilience and kept spending online, at restaurants and other outlets in September even as they grappled with higher prices, interest rates and a host of other headwinds piling up.
Retail sales rose 0.7% in September, more than twice what economists had expected, and close to a revised 0.8% bump in August, the Commerce Department reported Tuesday. Retail sales in August were inflated after gasoline prices spiked, however. That was not the case in September when gas prices began to ease.
A closely watched category of retail sales that excludes auto dealers, gas stations and building materials and feeds into the gross domestic product jumped 0.6% last month compared to the prior month.
Spending at restaurants was up 0.9%, while spending online rose 1.1% last month, according to the report. Sales at general merchandise stores rose 0.4%. Business at grocery stores was up 0.4%. Sales at home furnishings and furniture stores were flat, while electronics stores and outlets that sell building materials saw declines reflecting a difficult housing market.
The retail sales report, which reflects the sixth consecutive monthly gain, reinforces the fact that American consumers, as a whole, are showing no signs of pulling back on their spending, which powers most of the economy. That spending comes despite attempts by the Federal Reserve to cool spending and hiring. But the robust sales report also means that the Fed officials could leave the door open for additional rate hikes.
“If the cost-of-living crisis has hit consumer confidence you wouldn’t know it judging by a second month of strong retail sales with the consumer buying everything that wasn’t nailed down,” said Christopher S. Rupkey, chief economist at FWDBONDS LLC, a financial markets research company. “Fed officials have another rate hike this year up on their forecast board, and they will need to use it, if the economic data continues to surprise economists on the upside.”
Still, questions remain whether shoppers will finally buckle as more bad news piles up from federal budget wrangling, student loan repayments — and new global tensions tied to the Oct. 7 surprise attack by Hamas in Israel. The moratorium on student loan payments lifted Oct. 1. Analysts say that shoppers could become rattled if the Israel-Hamas war is not contained.
The retail sales report came as businesses across the U.S. economy ramped up hiring in September, defying surging interest rates, and the ongoing threat of a government shutdown. The strength of hiring has surprised economists inside and outside of the Fed.
Consumer prices rose 0.4% from August to September, below the previous month’s 0.6% pace. The report from the Labor Department also showed that year-over-year inflation was flat last month from a 3.7% rise in August.
The government’s monthly retail sales report offers only a partial look at consumer spending; it doesn’t include many services, including health care, travel and hotel lodging.
