Retail sales and food-services spending rose 1.7 percent in October following a 0.8 percent gain in July and a 1.2 percent increase in August. The three-month annualized growth rate over that span is a very strong 15.8 percent. The increases put total retail sales at a new record high and well above the pre-pandemic trend (see first chart).
Core retail sales, which exclude motor vehicle dealers and gasoline retailers, posted a strong 1.4 percent increase for the month, following gains of 0.5 percent in September and 2.2 percent in August, leaving that measure with a 17.6 percent annualized growth rate over the past three months. Core retail sales are at a new record high and well above the pre-pandemic trend (see first chart).
Most categories were up in October with ten posting gains, two showing declines, and one essentially unchanged. The gains were led by a 4.0 percent increase in nonstore store (primarily online) retailers, followed by gasoline station sales (up 3.9 percent) and electronics and appliance retailers, up 3.8 percent. Gasoline sales often reflect large price movements; the average price for a gallon of gasoline rose 3.5 percent in October.
The two categories showing drops in October were clothing and accessory stores, down 0.7 percent, and health and personal care stores (off 0.6 percent). Food services and drinking places (restaurants) were essentially unchanged for the month.
Nonstore retailers had been growing at a strong rate prior to the pandemic (9.1 percent annualized over the ten years through December 2019; see top of third chart). However, over the past 18 months, the annualized growth rate accelerated, hitting an extraordinary 12.7 percent as of October (see top of third chart). The strong performance has pushed the nonstore sales share of core retail sales from 17.2 percent for December 2019 to 20.0 percent for October (see bottom of third chart).
Overall, retail sales posted a strong gain in October. Core retail sales (excluding vehicles and gasoline) also posted a very strong gain in October, and suggests consumers remain resilient despite the deep political divides and growing anger towards politicians and fellow citizens simply because of differing opinions. The economic outlook is for continued growth with upward pressure on prices. The pressure on prices is likely to ease as production and logistical issues are resolved. However, the tidal wave of intense partisanship remains a threat to the economic outlook and the country itself.
This article, Retail Spending Hits a New Record High in October, was originally published by the American Institute for Economic Research and appears here with permission. Please support their efforts.