Retail Sales Fell in October

By SBE Council at 16 November, 2023, 2:15 pm

by Raymond J. Keating – 

How is the consumer doing? We hear that question asked a great deal when looking at the economy.

It’s worth noting that the consumer is not a leader on the economy, but a follower. That is, consumers follow the lead of businesses. When businesses are being created, and when firms are making productivity-enhancing investments and hiring, consumers feel good, and spend accordingly.

There’s also the inflation question. That is, how much of consumer spending is simply laying out more dollars that are worth less to purchase the same things that were bought previously?

Keeping such thoughts and questions in mind, the U.S. Census Bureau released its latest report on retail and food services sales. Unfortunately, retail and food services sales declined by 0.1 percent in October. And retail sales alone declined by 0.2 percent.

When looking at major spending categories, the big positives for the month were found with electronics and appliance stores (+0.6 percent), and health and personal care stores (+1.1 percent). Meanwhile, the notable negatives came with motor vehicles and parts dealers (-1.0 percent), furniture and home furnishing stores (-2.0 percent), sporting goods, hobby, musical instrument and book stores (-0.8 percent), and miscellaneous stores (-1.7 percent).

Compared to a year earlier, retail and food services sales grew by 2.5 percent, and retail sales by 1.6 percent. However, since inflation ran at 3.2 percent over the same period, then real sales declined. (The above chart shows the change in retail and food services sales and inflation, as measured by changes in the Consumer Price Index, since early 2022.)

It also must be kept in mind that while the topline number from the latest GDP report was positive, the underlying data pointed to various concerns, especially on the business investment front, as SBE Council noted. Again, that’s a warning sign on consumer spending and the economy overall.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.