Despite rising interest rates and concerns about a faltering economy, consumers showed surprising strength by driving retail sales in September to levels well beyond expectations.
According to the Commerce Department’s advance report, retail sales rose 0.7% on the month, exceeding the 0.3% Dow Jones projection. Gas station sales aided the headline number, climbing 0.9% as pump prices increased.
Excluding automobiles, sales increased by 0.6%, exceeding the forecasted increase of 0.2%. The so-called control group, used to calculate the department’s GDP and excludes gas stations, office supply stores, mobile homes, auto dealers, and tobacco shops, also had a 0.6% increase.
Since the figures do not account for inflation, they show that customers more than met rising prices. According to the Consumer Price Index, inflation increased by 0.4% in September.
Compared to the 3.7% increase for the CPI, sales increased 3.8% year over year.
The month’s sales increases were spread out, with sellers of miscellaneous stores experiencing the most significant increase—a 3% jump. Online sales increased 1.1%, while dealers and auto parts had 1% growth, and dining and drinking establishments experienced 0.9% growth.
Only a few categories were on the decline: apparel merchants and stores selling electronics and appliances both experienced 0.8% monthly drops.
The retail report is regarded as critical by the Federal Reserve as officials examine the future of monetary policy. Although most markets anticipate that the Fed will stop hiking rates this cycle, an incredibly robust consumer base complicates the equation.
Even while employment growth has exceeded forecasts, it is predicted to taper down. Credit card balances are increasing; according to Bank of America, September balances saw a 0.2% monthly increase. It’s also anticipated that spending will be impacted by the start of student loan payments.
Still, third-quarter economic growth is expected to be robust. Following the retail statistics, Goldman Sachs upped its economic forecast, now anticipating GDP to accelerate at a 4% annualized rate in the third quarter.
ASBN, from startup to success, we are your go-to resource for small business news, expert advice, information, and event coverage.
