American shoppers spent more than twice what economists expected in September
Americans showed their steadfast resilience and kept spending in September even as they grappled with higher prices, interest rates and a host of other headwinds piling up.
Retail sales rose 0.7% in September, more than twice what economists had expected, and close to a revised 0.8% bump in August, the Commerce Department reported Tuesday. Retail sales in August were inflated after gasoline prices spiked, however. That was not the case in September when gas prices began to ease.
A closely watched category of retail sales that excludes auto dealers, gas stations and building materials and feeds into the gross domestic product jumped 0.6% last month compared to the prior month.
September’s uptick in retail sales, the sixth consecutive monthly gain, reflects how the U.S. economy has remained resilient despite attempts by the Federal Reserve to cool spending and hiring. Spending has been volatile after surging nearly 3% in January. Sales tumbled in February and March before recovering in the spring and summer.
Spending at restaurants were up 0.9%, while spending online rose 1.1% last month, according to the report. Sales at general merchandise stores rose 0.4%. Business at grocery stores was up 0.4%. Sales at home furnishings and furniture stores were flat, while electronics store saw a 0.8% decline reflecting a difficult housing market.
The retail sales report came as businesses across the U.S. economy ramped up hiring in September, defying surging interest rates, and the ongoing threat of a government shutdown. The strength of hiring has surprised economists inside and outside of the Fed.
Consumer prices rose 0.4% from August to September, below the previous month’s 0.6% pace. The report from the Labor Department also showed that year-over-year inflation was flat last month from a 3.7% rise in August.
The retail data doesn’t capture the impact from the resumption of student loan payments, which started Oct. 1 and could have an impact on the critical holiday shopping season. It also doesn’t cover the Oct. 7 surprise attack on Israel by Hamas. Analysts say that shoppers could become rattled if the Israel-Hamas war is not contained.
The government’s monthly retail sales report offers only a partial look at consumer spending; it doesn’t include many services, including health care, travel and hotel lodging.
