Retail sales in the US turned negative in November as the holiday shopping season got under way, dragged down by cars, furniture and building supplies, according to official data released Thursday.
The contraction comes as American consumers contend with persistently high inflation that has bumped up the cost of many items ranging from groceries to clothing.
While consumer price increases have eased slightly in recent months, the pace of inflation remains around three times the pre-pandemic level.
Retail sales fell 0.6 per cent in November from October to $689.4 billion, more than expected, according to the latest Commerce Department figures.
The numbers, which follow a bounce in October, came as auto sales plunged 2.6 per cent in November from the month before, while sales of goods related to furniture and building materials dropped by a similar rate.
As costs remain elevated, the latest data suggest consumers are spending more on essential items like food and health care, with spending at food and beverage stores and grocery stores jumping 0.8 per cent from October to November.
As costs remain elevated, the latest data suggest consumers are spending more on essential items like food and health care.
Sales at restaurants and bars were robust as well, rising 0.9 per cent.
But with households squeezed by heightened prices, spending on other items slipped.
Sales at gasoline stations edged down 0.1 per cent.
The data are seasonally adjusted but do not take into account changes in prices. This means that as costs rise, a shopping dollar does not stretch as far and consumers have had to use more of their earnings on staple goods while seeking bargains.
Despite the glum figures, which come as the year-end shopping season gets under way, analysts point to underlying resilience for now.
“Overall, consumption remains supported by strong job growth and rising nominal incomes and wages and a cushion from excess savings,” said Rubeela Farooqi of High Frequency Economics.
While higher borrowing costs as the Federal Reserve pushes on with hikes in the benchmark interest rate may bite, gradually easing inflation “should be supportive of households,” she said.
But Ian Shepherdson of Pantheon Macroeconomics cautioned that economists remain “alert for a sharp slowdown in the first quarter as a weakening labour market makes people less willing to draw down on savings accumulated during Covid.”
