US retail sales lose steam in October after hurricanes

U.S. retail sales slowed in October, government data showed Friday, with analysts pointing out that devastating hurricanes in recent months likely disrupted consumption.

Sales rose 0.4% in October from the previous month, to $718.9 billion, according to Commerce Department data.

This is a slight increase from September’s revised 0.8% increase.

Consumer spending helped boost the U.S. economy over the past year despite high interest rates as the Federal Reserve struggled to control inflation.

But October’s slowdown, which came after the central bank began lowering the benchmark policy rate, could have been influenced by Hurricanes Helene and Milton, which hit in late September and early October, respectively.

Generally, lower interest rates should support economic activity.

The storms likely forced some businesses to temporarily close as people grappled with the aftermath, economists at Pantheon MacroEconomics said in a recent note.

“The sectoral distribution of retail sales also supports the idea that consumers have been prevented from shopping,” said Samuel Tombs, chief U.S. economist at Pantheon Macronomics.

He noted that sales at furniture stores and personal care stores have fallen, while non-store sales have increased.

“More recently, consumer optimism about the economic outlook may have increased since the election, driven by expectations of tax cuts and rising stock prices,” Tombs added.

He was referring to Donald Trump’s victory over Kamala Harris in the US presidential election.

In October, retail sales, excluding those at car dealerships and gas stations, rose just 0.1% from the previous month.

Sales at restaurants and bars, as well as grocery stores, slowed compared to September, according to Commerce Department data.

Compared to last year, retail sales increased by 2.8 percent in October.

Chief national economist Kathy Bostjancic noted that October’s rise in retail sales “follows a sharply revised increase in spending in September.”

This suggests that consumers maintained “upbeat spending momentum” at the start of the fourth quarter, she said.

It expects GDP growth to remain robust in the last three months of the year, although the rise eases from the third quarter.

Source: AFP