Modest 0.3% November retail sales bump, optimism still high
NEW YORK (AP) — Americans slowed their spending from October to November but continued shopping ahead of the critical holiday season, brushing off rising prices and shortages.
Retail sales rose a modest, seasonally adjusted 0.3% in November compared with the previous month when sales jumped 1.8%, the U.S. Commerce Department said Wednesday.
That was a bit weaker than most economists had expected, yet consistent headlines about shortages may have pushed some to begin holiday shopping early, shifting sales from November to October.
There were also hints of a return to pre-pandemic behavior with Americans spending more on services that include going out to dinner, activities that had been under significant pressure due to the fear of infection.
While sales dipped at department stores and other retail spots, sales at restaurants rose 1% compared with October. That is the biggest gain since July.
Omicron emerged late in November, however, and the report Wednesday would not capture any of its negative effects.
Stephen Stanley, chief economist at Amherst Pierpont, said that the typical pattern in monthly retail activity before the pandemic alternated between weak and strong, and this also may be a shift back to more normal activity.
“The miss relative to expectations, while substantial, is not large enough to be gamechanging for the economic big picture,” Stanley wrote Wednesday. “It appears that we may (be) getting back to that mode. I still fully expect the Christmas retail season will be robust.”
Retail sales, though not a strong as forecast, continue to rise in an economic environment that has hamstrung some retailers. Many have had to sharply increase pay to find and keep workers, increasing their cost of doing business. They are also scrambling to fill shelves with major U.S. ports still backed up.
At the same time with Americans paying more across the board for necessities like food and gas, the slowdown in spending may be and indication of inflation fatigue.
At Stew Leonard’s, a family run grocery chain based in Connecticut and New York, some families are trading down, buying chicken instead of red meat, or bananas rather than more expensive blueberries. Others seem unfazed, snapping up lobster despite a significant uptick in prices.
At Kido, a small children’s boutique called Kido in Chicago, spending is elevated despite an uptick of about 5% for toys and other things, said owner Keewa Nurullah. She expects a 15% increase in sales for the year.