New Data Show Retail Sales Remain Strong; Here’s How 1 CU Economist Views Report

 11/16/2022 

ARLINGTON, Va.– Retails sales increased a seasonally adjusted 1.3% in October compared with September, the strongest growth since early 2022 and a sign the economy remains resilient, according to new data from the Commerce Department.

Curt Long

According to the data, consumers spent more at auto dealers, furniture stores, grocery stores and gasoline stations.

“Retail sales perked up in October, growing at the strongest pace since February. Notably, this report coincides with the weaker-than-anticipated report on the consumer price index (CPI) from last week,” said NAFCU’s chief economist, Curt Long. “If inflation can truly deflate without damaging the labor market or consumer spending, that would suggest a strong likelihood of a soft landing. However, too much weight should not be placed on noisy data that is subject to revisions.

“Retail sales had scuffled over the three months prior to October. The Federal Reserve Bank of Atlanta's GDPNow tracker indicated a 4% growth rate in the fourth quarter based on available data,” Long continued. “That estimate is likely to rise with these figures. NAFCU continues to anticipate a 50 basis point hike by the FOMC at the committee's December meeting."

Inflation Slows

Inflation also slowed somewhat in October to the slowest pace since January,  but remained at an elevated level. The consumer-price index rose a seasonally adjusted 7.7% in October from a year before, the Labor Department said last week, slowing from 9.1% in June, which was the highest in four decades, noted the Wall Street Journal.

The Journal added that economists and executives are closely watching consumer spending in the early weeks of the important holiday selling season, with next week’s Black Friday offering a strong preview of what to expect.