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Consumer Spending Cools Down as Holiday Season Heats Up

Consumer spending isn’t the only thing slowing down—sales of clothing and accessories are on a downward trend, too.

Though U.S. retail sales rose 4.2 percent year-over year, that growth is markedly slower versus the 5.8 percent gain in the comparable 2018 period. And according to data published by the U.S. Census Bureau, overall sales, including auto dealers, gas stations and restaurants, inched up just 0.3 percent when seasonally adjusted from September.

Stores selling apparel and accessories saw sales dip 1.7 percent year-over-year and 1 percent month-over-month, seasonally adjusted from September. But October’s big sector losers were the typical big-ticket retailers, including electronics and appliance stores, which saw a 3 percent decline year-over-year and a 0.4 percent decrease month-over-month, seasonally adjusted.

Digital commerce remained a bright spot for retail overall. Online sales posted a healthy 14.6 percent year-over-year growth, and were up 0.9 percent month-over-month, also seasonally adjusted.

“Uncertainty around trade policy has impacted consumer sentiment recently but ongoing job growth, low interest rates, low inflation and the stock market hitting record highs provide support for consumer spending,” NRF chief economist Jack Kleinhenz said.

While overall retail sales seasonally adjusted bounded back from September’s decline–down 0.3 percent, representing the first decrease in seven months–the control group sales, which excludes sales at restaurants, gasoline stations, building materials stores and auto dealers, suggest the slowest gain in nine months, Tim Quinlan, senior economist at Wells Fargo Securities, said.

And though sales from the control group have “cooled from their breakneck pace earlier this year,” Quinlan still expects holiday sales this year to climb 5 percent. While consumer fundamentals remain strong, the holiday sales forecast also is “boosted by low-base effects due to the oddly weak holiday sales season last year,” Quinlan concluded.