Defying inflation, Americans ramped up spending last month
WASHINGTON » Many Americans have taken a darker view of the economy as inflation has worsened. Yet so far, they appear no less willing to spend freely at retailers — an encouraging sign for the crucial holiday shopping season.
Buoyed by solid hiring, healthy pay gains and substantial savings stemming in part from government stimulus checks and other relief, Americans ramped up their spending at retail stores and online shops last month. Some of the increase reflected the impact of higher prices, and there were signs that Americans have started to seek out cheaper options.
Yet the October gain the government reported Tuesday was solid enough for most economists to anticipate holiday shopping jumping by a record amount this year.
The data also illustrates a key factor behind the supply chain backups that have left dozens of ships waiting to unload at U.S. ports: Americans are buying a tremendous amount of goods, from appliances to electronics to furniture. Retail and food service sales have surged 16.3% compared with a year ago. That is a record high excluding several months during the spring when federal stimulus checks caused sharp spikes in spending.
From September to October, retail sales jumped 1.7%, the U.S. Commerce Department said Tuesday. That was the biggest month-to-month gain since March and was up from a 0.8% increase from August to September.
The increase occurred just as retailers face a host of challenges. Many have had to sharply raise pay to find and keep workers, thereby increasing their labor costs. And some are scrambling amid overwhelmed supply chains to keep their shelves stocked.
“Even with all these problems, we’re still on track here for a banner year,” said Tim Quinlan, an economist at Wells Fargo.
After adjusting for inflation, Quinlan estimates that retail sales in November and December will be 10% higher than a year earlier, which would be the biggest such gain in seven years.
Last month, sales soared 3.8% at electronics and appliance stores and 4% among online retailers. Those increases suggested that many Americans are already doing their holiday shopping, possibly to avoid higher prices and supply shortages closer to the holidays.