Retail sales unexpectedly rise in November as consumers keep spending
Retail sales rebound in November as inflation shows signs of cooling
Retail earnings indicate the US consumer is getting weaker, expert says
Key Advisors Wealth Management co-founder and CEO Eddie Ghabour discusses the state of the consumer ahead of the 2023 holiday shopping season on 'Varney & Co.'
Americans picked up their spending in November ahead of the pivotal holiday season as inflation showed welcome signs of cooling.
Retail sales, a measure of how much consumers spent on a number of everyday goods including cars, food and gasoline, rose 0.3% in November, the Commerce Department said Thursday. That is above both the 0.1% decline projected by Refinitiv economists and the revised 0.2% drop recorded in October.
Excluding the more volatile measurements of gasoline and autos, sales climbed 0.6% last month.
The November advance is not adjusted for inflation, meaning that consumers may be spending the same but getting less bang for their buck.
SILVER LINING OF HIGHER INTEREST RATES: SAVINGS ACCOUNT RATES
A shopper browses albums at a record store in Atlanta on Feb. 14, 2023. (Dustin Chambers/Bloomberg via Getty Images / Getty Images)
"Today’s data suggests the U.S. economy – especially the consumer – is still chugging along," said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley. "The risk going forward is that too much economic heat could reignite inflation and put the Fed back in a defensive posture. For now, though, the 'soft-ish' landing scenario remains in place."
Consumers continued to spend at grocery stores, car dealers, health and personal stores and restaurants and bars – a bellwether of discretionary spending. They also continued to open their wallets when online shopping, with spending at non-store retailers jumping 1% from the previous month.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WMT | WALMART INC. | 90.44 | +2.04 | +2.31% |
| HD | THE HOME DEPOT INC. | 420.00 | +9.62 | +2.35% |
| LOW | LOWE'S COMPANIES INC. | 264.68 | -0.54 | -0.20% |
| TGT | TARGET CORP. | 125.01 | +3.42 | +2.81% |
However, they pulled back their spending at gas stations, electronics and appliance stores, building material and garden stores, and miscellaneous retailers. Spending also dropped at general merchandise shops.
STUDENT LOAN REPAYMENTS COULD SLAM BIG-NAME RETAILERS THIS FALL
Sales rose in eight of 13 retail categories last month.
Shoppers walk through a store at Tysons Corner Mall in Tysons, Virginia, on April 2, 2022. (Stefani Reynolds/AFP via Getty Images / Getty Images)
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A solid job market and big wage increases have helped to buoy consumer spending in recent months, despite high inflation. However, many economists have been predicting that consumers will grow more cautious as student loan payments resume and high interest rates continue to work their way through the economy.
On top of that, more Americans are relying on their credit cards to cover necessities.
Credit card debt surged to a new record in the third quarter, while delinquencies are also on the rise.
Still, the stronger-than-expected data suggests that the consumer remains strong for now, despite a number of economic headwinds.
"Consumers are still willing to spend, albeit at a slower pace," said Lydia Boussour, EY senior economist. "Looking ahead though, we expect the combination of cost fatigue, rising debt servicing burdens and tighter credit to weigh on spending in [the first half of] 2024."