WASHINGTON (AP) — Americans stepped up their spending at retailers last month in the latest sign that healthy consumer spending is driving the economy’s steady growth.
Retail sales rose 0.4% from September to October, the Commerce Department said Friday, a solid increase though less than the previous month’s robust 0.8% gain.
A 1.6% jump in sales at auto dealers drove much of the gain. Purchases climbed 2.3% at electronics and appliances stores and 0.7% at restaurants and bars. Though some of October’s rise in retail sales reflected higher prices, it mainly indicated increased purchases.
Sales in some categories fell — furniture stores, clothing outlets and drug stores, among them — though economists said that weakness likely resulted, at least in part, from last month’s hurricanes. Sales at home and garden stores rose, potentially reflecting rebuilding activity after the storms.
“The moderation in the pace of price growth is allowing consumers to ratchet up spending,” said Tim Quinlan, an economist at Wells Fargo. “People may not love how much it costs to go out to eat, but their bar and restaurant spending is growing faster than prices are.”
Friday’s report arrives as retailers are poised to enter the critically important holiday shopping season in less than two weeks. Analysts envision a solid holiday shopping season, though perhaps not as robust as last year’s, with many shoppers under pressure from overall still-high prices despite the easing of inflation.
The latest retail sales figures suggest that the economy is growing briskly again in the current October-December quarter, after having expanded at a sturdy 2.8% annual rate in the previous quarter. Since peaking at 9.1% more than two years ago, inflation has sunk to 2.6%, not far above pre-pandemic levels. And Americans’ take-home pay, on average, has surpassed inflation for about 18 months.
Still, the post-pandemic inflation spike has left prices about 20% higher than they were three years ago and dimmed Americans’ outlook on the economy. That was a key reason why Donald Trump was able to capitalize on public discontent with the Biden-Harris administration and recapture the White House in last week’s election.
Despite high price levels, though, Trump inherits an economy in which spending is strong, growth is solid and unemployment low.
Other recent economic reports have also pointed to a healthy economy. In a sign that households, whose purchases drive most of the economy, will continue spending, the Conference Board’s most recent consumer confidence index posted its biggest monthly gain since 2021. The proportion of consumers who expect a recession in the next 12 months dropped to its lowest point since the board first posed that question in 2022.