Modest 0.3% November retail sales bump, optimism still high

<p><p>NEW YORK – Americans slowed their spending from October to November but continued shopping ahead of the critical holiday season, brushing off rising prices and shortages.</p></p><p><p>Retail sales rose a modest, seasonally adjusted 0.3% in November compared with the previous month when sales jumped 1.8%, the U.S. Commerce Department said Wednesday.</p></p><p><p>That was a bit weaker than most economists had expected, yet consistent headlines about shortages may have pushed some to begin holiday shopping early, shifting sales from November to October.</p></p><p><p>There were also hints of a return to pre-pandemic behavior with Americans spending more on services that include going out to dinner, activities that had been under significant pressure due to the fear of infection.</p></p><p><p>While sales dipped at department stores and other retail spots, sales at restaurants rose 1% compared with October. That is the biggest gain since July.</p></p><p><p>Omicron emerged late in November, however, and the report Wednesday would not capture any of its negative effects.</p></p><p><p>Stephen Stanley, chief economist at Amherst Pierpont, said the typical pattern in monthly retail activity before the pandemic alternated between weak and strong, and this also may be a shift back to more normal activity.</p></p><p><p>“The miss relative to expectations, while substantial, is not large enough to be game-changing for the economic big picture,” Stanley wrote Wednesday.</p></p><p><p>“It appears that we may (be) getting back to that mode. I still fully expect the Christmas retail season will be robust.”</p></p><p><p>Retail sales, though not as strong as forecast, continue to rise in an economic environment that has hamstrung some retailers.<span class=”print_trim”>Many have had to sharply increase pay to find and keep workers, increasing their cost of doing business.</span></p></p><p><p><span class=”print_trim”>They are also scrambling to fill shelves with major U.S. ports still backed up.</span></p></p><p><p><span class=”print_trim”>At the same time with Americans paying more across the board for necessities like food and gas, the slowdown in spending may be and indication of inflation fatigue.</span></p></p><p><p><span class=”print_trim”>At Stew Leonard’s, a family run grocery chain based in Connecticut and New York, some families are trading down, buying chicken instead of red meat, or bananas rather than more expensive blueberries.</span></p></p><p><p><span class=”print_trim”>Others seem unfazed, snapping up lobster despite a significant uptick in prices.</span></p></p><p><p><span class=”print_trim”>At Kido, a small children’s boutique called Kido in Chicago, spending is elevated despite an uptick of about 5% for toys and other things, said owner Keewa Nurullah. She expects a 15% increase in sales for the year.</span></p></p><p><p><span class=”print_trim”>“Those gift givers are buying more than ever before because they are trying to disguise the pandemic,” Nurullah said. “They don’t want their kids to be deprived.”</span></p></p><p><p><span class=”print_trim”>The U.S. reported last week that consumer prices jumped 6.8% over the past year – the biggest surge in almost four decades.</span></p></p><p><p><span class=”print_trim”>Some of the largest cost spikes have been for things that consumers would be very aware of.</span></p></p><p><p><span class=”print_trim”>In addition to food and gas, prices for homes, cars, clothing and almost everything else is on the rise.</span></p></p><p><p><span class=”print_trim”>But U.S. families, on average, are taking home more money than they did before the pandemic.</span></p></p><p><p><span class=”print_trim”>Wages and salaries grew 4.2% in September compared with a year earlier, the largest annual increase in two decades of records.</span></p></p><p><p><span class=”print_trim”>And the government provided a $1,400 stimulus check to all households in March as well as a $300-a-week unemployment aid supplement from March to September. Most households with children began receiving the $300 monthly child tax credit in July.</span></p></p><p><p><span class=”print_trim”>That has led to buoyed optimism about consumer spending, which drives a majority of the economic activity in the U.S.</span></p></p><p><p><span class=”print_trim”>Though big box retailers are promising stocked shelves for the holiday, supply constraints appear to be stubborn.</span></p></p><p><p><span class=”print_trim”>Target CEO Brian Cornell recently told The Associated Press he believes that it will take several years for supply chain clogs to be cleared.</span></p></p><p><p><span class=”print_trim”>That is not all bad news.</span></p></p><p><p><span class=”print_trim”>The Minneapolis retailer has added 30,000 new supply chain jobs to meet surging demand and to navigate the changed landscape.</span></p></p><p><p><span class=”print_trim”>“It’s really driven by just incredibly strong demand and a very healthy U.S. consumer,” said Cornell.</span></p></p><p><p><span class=”print_trim”>The National Retail Federation, the nation’s largest retail trade group, said this month that the holiday shopping season appears to be on pace to exceed its sales growth forecast of between 8.5% and 10.5% despite additional challenges this year, from a new variant of the coronavirus, to soaring inflation.</span></p></p><p><p><span class=”print_trim”>The retail report released Wednesday covers only about a third of overall consumer spending and doesn’t include services such as haircuts, hotel stays and plane tickets.</span></p></p><p><p><span class=”print_trim”>Still, the average U.S. consumer spent and additional $330 extra per person this November compared with the same stretch last year, according to Neil Saunders, Managing Director of GlobalData.</span></p></p><p><p><span class=”print_trim”>“Such a large uplift clearly signals that, regardless of economic or pandemic concerns, the consumer is determined to spend what it takes to have a jolly holiday season,” Saunders wrote.</span></p></p>