Us Retail Spending Sagged In September

The government’s retail data is finally trickling in after shutdown-related delays and the economic verdict is...meh. US retail sales (not adjusted for inflation) rose just 0.2% in September, compared to a 0.6% jump in August, according to the Commerce Department. Economists were hoping for growth of at least 0.3%.

The lackluster numbers wrap up what was an otherwise solid Q3 for US retailers, with July posting 0.65% growth. The data suggests that shoppers are cooling on splurging on items like clothes and vehicles but are still spending on personal-care items and furniture. Americans also still seemed willing to go out to bars and restaurants.

Bargain retailers benefit

Companies that pride themselves on values and discounts are doing well: Walmart’s Q3 sales beat estimates, and the company raised its profit outlook for the second time this year. TJX Companies, which owns and chaotically organizes both TJ Maxx and Marshalls, also raised annual sales and profit estimates last week.

Best Buy, meanwhile, reported a 2.7% increase in same-store sales, its biggest quarterly gain in four years, though CEO Corie Barry said that customers were being more “thoughtful” about big-ticket items.

Not spending equally. Some economists continue to point to the so-called K-shaped economy—or a growing divide between high-income spenders and everyone else. An analysis of Federal Reserve data showed that the top 10% income bracket made up almost half of total consumer spending in Q2.

Looking ahead…despite affordability fears, the holiday-shopping season could be a good one for retailers. Mastercard is expecting a 3.6% jump in seasonal spending this year—not necessarily driven by shoppers buying more, but rather them paying higher prices on pretty much everything. A recent survey by the Conference Board showed consumer confidence cratering.—MM