Rising prices couldn’t stop a surge of shopping in October, as consumers ramped up their spending on cars, gas, electronics, gardening supplies, and all kinds of other stuff.
Retail and food services sales jumped 1.7% in October from September and were an impressive 16.3% higher than in October 2020, according to the Census Bureau’s monthly report on retail spending released Tuesday. The increase—the highest monthly gain since March, when the government began sending out stimulus payments of up to $1,400 per person—surprised economists. First Trust said the consensus expectation was a 1.4% gain. Moreover, spending increased faster than prices, indicating that people were buying more things, not just being forced to spend more because of inflation, economists said.
Shoppers these days are being pulled in opposite directions by conflicting forces: Increasing prices discourage buying, but plentiful jobs, rising wages, and money saved up during the pandemic provide the wherewithal for spending. A lot of people might also be doing their holiday shopping early to get ahead of the supply chain disruptions they’ve heard about. While people may be downbeat about the economy when polled, they’re saying something else at the cash register. October’s report is an indication that people are still very willing to open their wallets, at least for the moment, economists said.
“American retailers racked up their best month since the rebates-led spike in March, suggesting inflation has yet to clamp down on purchasing power,” said Sal Guatieri, a senior economist at BMO, in a commentary. “Should inflation continue to climb, it will pose a larger challenge to families on tight budgets. But for now, both consumers and the economy, in aggregate, look to cap the year on a high note.”
Online and mail-order shopping was a major contributor to the overall spending bump, rising 4% from the previous month and hammering home just how much the pandemic turbocharged the shift from brick-and-mortar stores to the Internet—sales outside of stores are now 40% higher than before the pandemic hit.
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