US retail sales rise 0.3% in November
NEW YORK — Americans picked up their spending from October to November unexpectedly as the unofficial holiday season kicked off, underscoring the power of shoppers despite elevated prices.
Retail sales rose 0.3%, in November from October, when sales fell 0.2% according to the Commerce Department on Thursday. Sales were expected to decline again in November due to a myriad of issues, including uncertainty over the economy. Excluding car and gas sales, sales rose 0.6%.
As they have been doing for much of the year American consumers, a huge engine for economic growth in the US, hit the stores, shopped online, went out to restaurants or traveled.
Business at restaurants, furniture stores and online rose. Sales at clothing and accessories stores were also up. Sales at electronics, appliance and department stores fell. The figures aren’t adjusted for inflation.
The urge to spend for Americans appears to have some running room even after a blowout summer. Consumer spending jumped in the July-September quarter. Economists have been expecting spending to slow in the final three months of the year as credit card debt and delinquencies rise, and savings fall. And while inflation is easing, prices are still higher at restaurants, car shops, or for things like rent.
“While consumers continue to face hurdles from higher borrowing costs, tighter credit conditions and elevated prices, a stillstrong labor market, a positive trend in incomes and an easing in price pressures should keep spending and growth positive for now,” wrote Rubeela Farooqi, chief US economist for High Frequency Economics.
US employment data last week showed that employers added 199,000 jobs in November and the unemployment rate declined to 3.7%. Inflation has plummeted in little over a year from a troubling 9.1%, to 3.2%. While inflation is still above the desired level, the economy by most counts is likely to avoid the recession many economists had feared, a potential side effect of US attempts to cool inflation.
Yet a lot of Americans remain gloomy, according to the University of Michigan’s Index of Consumer Sentiment. The preliminary December figures issued Friday showed moods have improved as more people see inflation cooling.
Stores have been discounting holiday merchandise earlier and heavier. Mark Cohen, director of retail studies at Columbia Business School, believes that stores have been intensifying sales to get shoppers to buy.
Ted Rossman, senior industry analyst at Bankrate, noted that credit card balances and rates are at all-time highs. That has led to some concerns about the willingness to take on debt with the cost of borrowing still comparatively high.
“It feels like the holiday debt hangover could be particularly nasty this year,” he said.