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Despite rampant inflation, U.S. shoppers spent 1.7 percent more in October than in September, according to the U.S. commerce department.
Spending climbed 4 percent at online retailers, 3.9 percent among gas stations, 2.2 percent at department stores, 1.8 percent for auto dealers, 1.5 percent among book, hobby, music, and sporting goods stores, and 1.1 percent at grocery stores, the department said. Appliances, electronics, and hardware were stellar performers.
Restaurant and bar sales were flat.
Spending is expected to shift from online to brick-and-mortar retailers as the holidays approach and consumers fear not being able to receive goods in time, according to Bloomberg.
Gift cards also are selling well, retailers noted.
The spending figures are not adjusted for inflation, so some of the increase can be attributed to higher prices, not necessarily to consumers buying more items.
On 16 November, Walmart reported strong third-quarter sales even though it raised retail prices as consumers began their holiday shopping. The company said it is building its inventories for “an expected strong holiday season.”
Home Depot’s third-quarter results were better than it had expected, the company said in reporting its numbers last week.
The growth in spending foreshadows a strong holiday shopping season, analysts told Bloomberg.
Partly due to October’s strong number, J.P. Morgan raised its fourth-quarter forecast for U.S. economic growth from 4 percent to 5 percent.
U.S. stocks prices rose after news that consumers keep spending freely boosted hopes for a bountiful holiday retail season.
“Consumers say they’re pessimistic—we have had very high inflation—but the truth is they’re in very good shape right now,” because of about $2 trillion in COVID-era savings, low interest rates, and a recovering jobs market, Gus Faucher, chief economist at PNC Financial Services, said to Bloomberg.
Strong initial holiday sales might not continue, however; consumers might simply be doing their shopping earlier out of fear of shortages as the holidays approach.
Companies promoting holiday sales and Black Friday deals earlier than usual might have only shifted the holiday sales season forward instead of expanding it, a survey by S&P Global Market Intelligence found.
TRENDPOST: Goldman Sachs and Walmart agree with our previous forecast of strong sales this holiday season.
However, as we noted in “More Lower-Income Americans Will Skip Holiday Shopping This Year” (26 Oct 2021), supply-line blockages will keep a range of goods off store shelves this year, whether the store is online or at your local mall.
As reported by the Wall Street Journal, “the number of out-of-stock messages online is up 172% compared with January 2020, according to Adobe Inc., which tracks visits to retail websites and product categories. Of the 18 categories tracked by Adobe, apparel currently has the highest stock-out levels, followed by sporting goods, baby products, and electronics.”
Still, there will still be plenty of products to buy.
The dollar volume of sales might increase over last year, but much, and perhaps all, of that increase would be due to inflation, not consumers’ expanded purchases. Thus, with supply low and demand high, retailers will be charging higher prices and offering fewer holiday bargains.
Much of the retail industry depends on strong winter holiday sales to turn a profit. If those profits fail to appear this season, more storefronts will go dark and more retail workers will head for the unemployment line.
For retailers who survive, the current economic crunch will speed their adoption of automation, both at the checkout counter and in the back room.
TREND FORECAST: Minus a wild card event between now and Christmas, we forecast there will be more supply of product than demand in lands that are neither locked down and/or do not have strict COVID mandates. Thus there will be no product shortages. And we also forecast, there will be solid holiday sales growth.