U.S. retail sales October 2024/ consumer spending trends/ holiday shopping forecast/ inflation and wages/ economic growth Q4 2024/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. retail sales rose 0.4% in October, signaling resilient consumer spending and robust economic growth. This follows a 0.8% jump in September, with gains reported across auto dealerships, restaurants, and electronics stores. As inflation eases and take-home pay outpaces price increases, analysts anticipate a solid but moderate holiday shopping season compared to last year.
Retail Sales Increase in October: Quick Looks
- Retail Sales Growth: October retail sales rose by 0.4%, continuing September’s upward trend of 0.8%.
- Key Drivers: Auto dealers, restaurants, and electronics stores led the gains.
- Economic Outlook: Consumer spending supports steady growth, with Q4 expansion expected to match or exceed Q3’s 2.8%.
- Holiday Forecast: National Retail Federation predicts November-December spending growth of 2.5%-3.5% year-over-year.
- Inflation and Wages: Inflation remains subdued, and real wages have outpaced price growth for 18 months.
U.S. Retail Sales Rise in October, Boosting Economic Growth
Deep Look
Retail sales in the United States rose by a solid 0.4% from September to October, the Commerce Department reported Friday, reflecting strong consumer spending as the holiday shopping season approaches. While slightly below September’s robust 0.8% increase, the October figures demonstrate Americans’ continued willingness to spend despite lingering economic challenges.
Key Contributors to Growth
Sales gains were reported across multiple sectors, including auto dealerships, restaurants, and electronics stores, bolstering the economy’s growth trajectory. Consumer spending, which accounts for about two-thirds of U.S. economic activity, remains a critical driver of steady expansion.
The October results suggest the economy is on track for another strong quarter, with analysts predicting growth could match or exceed the 2.8% annualized pace seen in the July-September period.
Inflation and Wages: A Mixed Picture
The easing of inflation has played a significant role in supporting consumer spending. After peaking at 9.1% over two years ago, inflation has returned to near-optimal levels, giving Americans increased purchasing power. Real wages—take-home pay adjusted for inflation—have outpaced price growth for 18 consecutive months, contributing to improved consumer confidence.
However, the effects of post-pandemic inflation linger, with prices still approximately 20% higher than three years ago. This dynamic has tempered many Americans’ optimism about the economy, a sentiment reflected in last week’s presidential election results, which saw Donald Trump capitalize on economic discontent to win back the White House.
Resilient Consumer Confidence
Despite mixed feelings about the economy, consumer confidence is on the rise. The Conference Board’s latest consumer confidence index showed its largest monthly increase since 2021. Additionally, the share of Americans expecting a recession in the next year fell to its lowest level since tracking began in 2022. This uptick in confidence suggests continued consumer spending, which could further stabilize the economy in the months ahead.
Challenges in the Labor Market
While consumer spending remains robust, the job market has shown signs of cooling. The U.S. economy added just 12,000 jobs in October, a number dampened by temporary disruptions such as strikes and hurricanes. Economists note that this slowdown may be a short-term blip rather than a sign of broader weakness.
Holiday Shopping Season Outlook
As the holiday shopping season kicks off, retailers anticipate a solid, though potentially less dynamic, period of consumer activity. The National Retail Federation (NRF) projects holiday sales in November and December to grow between 2.5% and 3.5% compared to the same period in 2023, which saw a stronger 3.9% year-over-year increase. High prices continue to squeeze budgets, but easing inflation and seasonal promotions may support steady spending.
Resilience Amid Transition
The incoming Trump administration will inherit an economy characterized by strong spending, steady growth, and low unemployment. However, high price levels and evolving consumer sentiment present challenges that could shape fiscal and monetary policies in the coming years.
For now, the October retail sales report underscores the resilience of U.S. consumers, even amid broader economic transitions and global uncertainties.
