Americans spent more than expected in October but it’s not clear how much of the increase represents shoppers buying more and how much was just paying more due to inflation.
Retail sales jumped 1.7 percent from the prior month, the Department of Commerce said Tuesday. That easily beat last month’s upwardly revised 0.8 percent increase and was well above the one percent gain forecast by analysts surveyed by Econoday.
Excluding autos and gasoline, retail sales increased 1.4 percent, a big jump from September’s 0.5 percent gain. Analysts had forecast a 0.8 percent gain.
But is this a sign of rising consumer confidence and a willingness to spend more? The retail sales numbers are not adjusted for inflation and this year’s supply chain problems may be upsetting normal seasonal shopping patterns.
In October, inflation pushed prices of consumer goods up by the most in three decades. As a result, retail sales were bound to increase even if America’s buying patterns were unchanged. In fact, given the big jump in prices, retail sales likely would have gained in nominal terms even if consumers were buying fewer goods.
Worries about shortages and supply chain disruptions could also be pushing households to do holiday shopping earlier this year, which would boost spending in October but may result in disappointing numbers for November and December sales.
Year-to-date retail sales and restaurant spending is up 19.6 percent compared with a year ago. Excluding autos and gasoline, sales are up 16.5 percent. That is well above the rate of inflation. In fact, sales are up strongly in every type of retail store tracked by the Department of Commerce.
On a monthly basis, sales were up in every category except bars and restaurants, apparel stores, and health & personal care stores. Nonstore retail sales, which tracks online purchases, rose four percent, and sales at electronics and appliance stores rose 3.8 percent.