After rising in the previous month as Americans began their Christmas shopping early to avoid bare shelves, November retail sales in the United States climbed less than predicted, Reuters reported on Friday.
The Commerce Department’s data released on Wednesday showed a steep reduction in revenues at electronics and appliance businesses, suggesting that a shift in consumer spending away from products and toward services also weighed on retail sales last month. Sales from online stores stayed the same. The rising cost of basic necessities like food and transportation is likely causing people to cut down on their spending elsewhere.
After a setback in the third quarter caused by the COVID-19 Delta version and severe shortages, the minor increase in retail sales did not modify expectations that the economy was recovering speed. The Federal Reserve acknowledged rising inflation on Wednesday by announcing it will terminate its asset purchases from the crisis period in March, setting the stage for three rate hikes of a quarter of a percentage point by the end of 2022. keep reading
Consumers are “still doing their best to keep the economy’s sails full and the recovery on track,” according to Christopher Rupkey, chief economist at FWDBONDS in New York.
After jumping 1.8% in October, retail sales increased last month by 0.3%. The last four months of sales have seen consecutive increases. In November, sales were up 18.2 percent from the previous year. Reuters’ survey of economists predicted a 0.8% increase in retail sales. Forecasts varied widely, from staying the same to growing by 1.5%.
Midway through the month of November, some of the most prominent stores in the United States said that they had seen an early start to Christmas shopping. Despite greater savings and growing earnings despite a tight job market, December retail sales may remain low.
The global demand for goods caused by the trillions of dollars in COVID-19 pandemic aid from governments worldwide has put a strain on supply chains. Vehicles, household furnishings, and consumer gadgets are all experiencing shortages as a consequence, driving up their respective costs.
Inflation among consumers was at its highest annual rate since June 1982, at 6.8% in November. This high rate of inflation is expected to persist for some time. The import price index rose 0.7% in November, according to a second Labor Department data released on the same day.
David Berson, chief economist of Nationwide in Columbus, Ohio, stated, “Consumers have been assaulted with messaging about the effect of supply bottlenecks on the availability of Christmas items.” It’s possible that they’ve already finished most of their Christmas shopping before the typical deadline.
Investors’ reactions to stocks on Wall Street were varied. An index of major world currencies, including the dollar, increased. U.S. The value of Treasuries dropped.
Revenue from Shops Down
Retail sales, which are dominated by the selling of products, slowed in part because of scarcity and subsequent price increases. The car industry had a 0.1% decline in sales following a 1.7% increase in October. A worldwide shortage of semiconductors has kept cars in short supply. The sales percentage drop in the home appliance and electronics industry was 4.6%.
However, thanks in large part to the price of fuel, sales at service stations rose by 1.7%. Similarly reflective of the general upward trend in prices is the 1.3% increase in sales at grocery and beverage outlets.
The high cost of food and gas is making consumers prioritize other purchases less this holiday season, according to Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina. People are less willing to accept higher prices now than they were when they were awash in stimulus money.
Sporting goods, hobby, musical instrument, and book stores all saw growth in business, and construction supply stores did as well. Sales at clothing retailers climbed 0.5%.
The total income of the hospitality industry rose by 1.0%. Restaurants and bars are the sole services category in the retail sales report. A 37.4 percent increase in sales from the previous November indicates a shift in consumer spending back toward services. Goods saw a rise in demand as the epidemic progressed.
Retail sales fell 0.1% when excluding autos, fuel, construction materials, and food services. So-called “core” retail sales in October were revised up to show a 1.8% increase, from the initial 1.6% increase.
Most directly, the consumer spending share of GDP tracks growth in core retail sales. Consumer expenditure, when adjusted for inflation, or real, was likely unchanged in November, although it was faster than in the previous quarter. Growth in consumer spending, which drives more than two-thirds of the American economy, was 1.7% annually in the third quarter.
New York-based economist Daniel Silver from JPMorgan predicted that real consumer spending growth will be high on average in the fourth quarter, notwithstanding a poor November.
The highly contagious Omicron variety of COVID-19 is another reason to worry about reduced spending this winter. The Atlanta Fed has reduced its growth forecast for the fourth quarter from 8.7 percent to 7.0 percent as a result of the rising number of COVID-19 illnesses.
GDP expanded by 2.1% in the third quarter. A third report from the Commerce Department on Wednesday showed that company inventories increased by 1.2% in October, bolstering growth expectations for the current quarter. keep reading
“The winter Delta wave is here.”
Diane Swonk saidChicago-based Grant Thornton’s head economist. First-quarter results “should reveal the majority of the weakness linked with the current wave of illnesses.”
