October retail sales increase modestly
Retail sales increased 0.3 percent from September, the Commerce Department reported on Friday. The average price for regular gasoline has decreased 42 cents over the past 48 days. As a result, consumers have decreased spending at gasoline stations by 1.5 percent, leaving more money for other goods and services.
Consumers spent more on their hobbies in October. Sporting goods, music, and book sales increased 1.2 percent. Clothing sales increased 0.5 percent while health and personal care store sales increased 0.5 percent. In between shopping, consumers spent more at restaurants.
However, sales at electronics stores dropped by 1.6 percent in October, after increasing by 4.7 percent in September due to the release of the new iPhone.
Internet retailers continue to outdo brick-and-mortar department stores. Department-store sales fell by 0.5 percent while Internet sales increased by 1.9 percent. Prospects for Cyber Monday, the Internet’s answer to Black Friday, look strong.
Spending on big-ticket items increased in October. Car dealership sales increased 0.5 percent. Sales of home furnishings and building supplies increased 0.2 and 0.4 percent, respectively, likely because of September’s fast pace of existing home sales.
Steady improvements in the labor market have translated into higher retail sales. Both new hires and consumer confidence have reached post-recession highs. Confident workers with new jobs have applied for more credit cards, auto loans, and home equity lines of credit.
Despite the good news, headwinds to consumer spending remain. The number of underemployed and long-term unemployed is still elevated and wages are stagnant. Until more Americans find suitable and stable employment, retail spending will be restrained.