Retail sales in the US pleasantly surprised economists
2022.11.16 10:30
Retail sales in the US pleasantly surprised economists
Budrigannews.com – U.S. retail sales could prop up the economy, suggesting a recovery in consumer spending at the start of Q4 as households increased their purchases of cars and other goods.
Strong retail sales and signs of a slowdown in inflation, released by the US Commerce Department, boosted cautious optimism that the economy could avoid an expected recession next year or simply experience a mild downturn.
“In the end, there is a possibility of a soft landing,” said Paul Ashworth, chief North American economist at Capital Economics in Toronto.
Retail sales rose 1.3 percent last month. Economists polled by Reuters had forecast that sales would rise 1.0 percent. Retail sales are mainly commodities and are not adjusted for inflation. The tenth month increased by 8.3% year-on-year.
A one-time tax refund in California, where some households received up to $1,050 in stimulus checks, likely helped shore up sales. In addition, Amazon (NASDAQ:) held its fifth Prime Day promotion on 10/2.
After a significant increase in unit sales last month, sales at car dealerships rebounded by 1.3 percent, reflecting a significant improvement in supply. Sales of furniture stores increased by 1.1%.
In addition, the increase in gasoline prices led to a 4.1% increase in receipts at gas stations.
Online retail sales increased by 1.2%. Sales in food and beverage service establishments, the only category of services in retail sales, increased by 1.6%. However, sales at electronics retailers fell by 0.3%.
Revenues from general stores and sporting goods, hobbies, musical instruments and bookstores also declined. Clothing store sales were strong.
Massive savings accumulated during the Covid-19 pandemic and strong wage growth in a tight labor market generally mean that consumers are borrowing higher prices and costs, while households are also borrowing to sustain spending.
That support is expected to fade next year as stronger monetary policy weakens overall demand and tightens the labor market and economy. It is believed that low-income households are already running out of savings due to the pandemic.
The National Retail Federation predicts this month that holiday sales will increase by 6% to 8% this year. This would be a step below the 1021 13.5% achieved, but well above the 10% average over the last 4.9 years.
The Federal Reserve will raise its monetary policy interest rate by 375 basis points this year, from 3.75% to 4.00% close to zero.It It is battling rampant inflation in what has become the fastest rate hike cycle since the 1980s.
Retail sales, excluding cars, gasoline, building materials and food services, rose 0.7 percent last month. The data for the month was revised upwards to show that these so-called core retail sales grew by 0.6% instead of 0.4% as previously reported.
Core retail sales correspond most closely to the consumer spending component of gross domestic product.
The stable pace of consumer spending and the decrease in the volume of import bills helped GDP recover at an annual rate of 2.6% in the third quarter, after contracting in the first half of the year.
