U.S. retail spending eased less than expected in October.
Americans spent about $700 million less at retail stores, dealerships, and gas stations in October compared to the prior month when adjusted for seasonal variation, holiday, and trading-day differences, according to the Census Bureau’s advance monthly sales report released Wednesday.
Overall, U.S. retail sales fell 0.1% from September to October, coming in below the 0.3% forecast from Bloomberg economists and marking the first monthly decline since March 2023. While retail sales fell month over month in October, spending remains up 2.5% from a year earlier, according to the report.
Additionally, the change in retail sales from August to September was upwardly revised from 0.7% to 0.9%, reflecting that the consumer summer spending spree continued through September before the mild pullback in October.
“The consumer spent money like there was no tomorrow in Q3, and the retail sales data for October suggest that they broadly paused at the outset of Q4,” wrote Thomas Simons, a senior economist at Jefferies.
“While it is somewhat encouraging to see that spending did not fall off a cliff in October, the pause is likely a sign of further weakness to come,” he said in a research note on Wednesday, per Yahoo Finance.
The mix of persistent inflation, rising interest rates, and the resumption of student loan payments has placed a lot of pressure on the average U.S. consumer, which has caused retail spending to soften, according to Target Chief Growth Officer Christina Hennington.
“Consumers are feeling the weight of multiple economic pressures, and discretionary retail has borne the brunt of this weight,” said Hennington, per The Wall Street Journal.
With the slower start to Q4 spending, Jefferies economists forecast further weakness from consumers over the coming months.
“Q4 is off to a much slower start, and we are not optimistic about the next two months given the resumption of student loan payments in October and the lack of experiential spending opportunities in the Winter as compared with the late Summer,” Simon explained, per Yahoo Finance.