Retail sales rose at healthy pace last month in latest sign of US economy's health
Business
At the same time, there were some signs of consumer caution
WASHINGTON (AP) — Consumers stepped up their spending at retail stores last month, providing a boost to the economy in the early phases of the winter holiday shopping season.
Retail sales rose 0.7% in November, the Commerce Department said Tuesday, a solid increase and higher than October’s 0.5% gain. Sales jumped 2.6% at auto dealers, driving most of the gain.
Some of that demand likely reflected a need for new cars in parts of the southeast slammed by Hurricane Helene in October, as well as healthy incentives provided by car dealers. Big discounts at many retail chains also attracted some consumers.
The boost in spending underscores that the economy is still growing at a healthy pace even with higher interest rates, a trend that could cause the Federal Reserve to lower borrowing costs more slowly next year than they have previously signaled. The Fed will announce its latest rate decision Wednesday.
At the same time, there were some signs of consumer caution, as sales at grocery stores, clothing shops, and restaurants fell. Outside of car dealers and online retailers, sales gains were modest.
“We ultimately expect this will be a decent holiday sales season for retailers,” Tim Quinlan, an economist at Wells Fargo, said in a note to clients. “It’s not going to knock anyone’s socks off in the wake of record pandemic gains, but continued consumer momentum means it’s unlikely to be overly weak either.”
The economy expanded at nearly a 3% annual pace in the July-September quarter and some economists forecast steady growth in the final three months of this year as well. There are some signs of sluggishness in the job market, as hiring has weakened since early this year, but layoffs are also relatively rare and the unemployment rate is at a low 4.2%. Paychecks are growing a solid 4% pace, on average nationwide, which is modestly faster than inflation and helps fuel more spending.
