Shoppers hitting stores despite higher prices continue to power the economy. Retail sales grew more than expected, increasing 1.3% in October compared to the previous month, the Census Bureau announced today.
The rise in consumer spending comes after shoppers cut back in September, when retail sales were flat from the month before. So this acceleration could indicate a jump start to holiday shopping, as more retailers offer holiday sales sooner this year and consumers try to beat inflation by buying earlier.
Shoppers spent more at gas stations and grocery stores, but the retail sales report isn't adjusted for inflation. That means it doesn't take into account the impact that the price changes of goods have on retail sales figures.
Retail sales represent an important economic indicator because the bulk of the U.S. economy (almost 70%) is made up of consumer spending. If we all keep going shopping, the economy keeps humming. It's also a highly watched number as persistently high inflation has threatened to keep shoppers away from the stores and hoarding their cash. So far, that hasn't yet happened.
But the figures do come at a time when investors have concerns about the holiday shopping season. Retailers are reporting quarterly earnings this week, with Target reporting today that its revenue missed analyst estimates. The company highlighted a "challenging economic environment" in which shoppers are changing their spending habits due to inflation. Target also issued downbeat guidance that sales were slowing into the holiday season.
Stocks are losing ground today as concerns about a weak holiday shopping season send shares of Target and other retailers lower.
- Kristin
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