Novembers retail sales jumped by 0.6%. This increase indicates consumer spending momentum is still strong as we enter the fourth quarter of the year. This increase underscores the continued strength of underlying demand, even as economists expect a weaker retail showing in December.
As a result, the control group of retail categories helped to gauge core goods consumption. It had previously posted a 0.4% increase in November. Fifth, this is the latest in a string of positive signals in consumer behavior, indicative of consumers who are still engaged and buying. In comparison, last month we adjusted down the control group’s performance to just a 0.6% lift. Second, it underscores the urgent need to track these trends in real time.
Consumer Spending Trends
The momentum in consumer spending is especially important given that it makes up over two-thirds of all economic activity. November’s retail sales numbers accounted for that fact with a strong 0.5% increase even after stripping out auto sales. This points to a resilient consumer who is ready to keep spending on non-discretionary goods and services, helping to buoy economic growth.
During the holiday season in particular, retailers have been dependent on robust sales numbers to pad their profits. That picture holds across all the other data, which paint a very rosy November picture. Local businesses are understandably feeling hopeful about carrying this momentum well into the holiday shopping season.
Anticipated December Slowdown
In spite of these rosy November numbers, economists are calling for a relatively weak December for retail sales. Four main reasons are behind this anticipated slowdown. From potential supply chain shocks to shifting consumer preferences, the impacts of how Americans acclimate to a post-pandemic economy are shaping people’s experiences. Analysts cautioned that November was the anomaly. Households could pull back on spending as they prepare for the arrival of the new year.
This projected drop forces some retailers to consider closing their doors altogether. They need to develop effective strategies to maintain sales growth through what has historically been one of the most robust shopping seasons. Retailers need to be hands-on with promotions and discounts to lure back these price-sensitive consumers. These shoppers are increasingly picky about what they buy.
Implications for Economic Outlook
The overall retail landscape remains dynamic, with November’s data providing insights into consumer behavior heading into 2024. Whether they can be reconciled, retail and economists will be watching these trends closely to determine what they mean for future economic growth.
These are all major developments that policymakers should be watching closely. Retail sales are an important barometer of the health of consumers and the economy. Keeping consumer spending strong is key to encouraging growth in other parts of the economy as well.