Nicholas A. Juhle, CFA®

Chief Investment Officer

October Retail Sales – Shop Til We Drop

October retail sales rose 1.7% month-over-month (+0.8% adjusted for inflation); topping forecasts.  Retail spending increased 1.7% in October, the most since March, following an upwardly revised 0.8% increase in September.  Broad-based increases are an indication that consumer demand remains robust despite higher prices.   It appears that elevated savings and rising wages are supporting continued merchandise spending with strength from electronics and appliance stores, building material retailers, and nonstore retailers (e-commerce).  It is interesting to see such strong consumer demand in light of a sharp decline in consumer sentiment driven largely by inflation fears.  It’s possible that consumers are getting an early start on holiday shopping to get out ahead of potential shipping delays and additional price increases.  Either way, fourth quarter spending is off to a strong start and economists expect continued strength through year end with an improving labor market and health situation.

September retail sales (real) up 10.1% year-over-year.  The value of retail sales has risen sharply this year, supported by government stimulus, elevated savings, and economic reopening enabled by the ongoing vaccine campaign.  For perspective, the total value of retail sales in October was $638B, compared to $526B in February 2020 (pre-pandemic) and compared to $553B in October 2020 – see chart below.