Hurricanes, Election Can’t Slow Down U.S. Consumers

Retail sales data for October showed that even torrential storms and uncertainty around the election couldn’t slow down the consumer spending. 

U.S. retail sales were not only higher by 0.4% from the prior month, but the data for September was revised higher to reflect a 0.8% growth in sales, a Census Bureau report showed Friday. Economists surveyed by The Wall Street Journal and Dow Jones Newswires forecasted a more modest 0.3% increase in October.

Consumer and business sentiment often swoon before elections; the most recent was no exception. However, the data showed that any worries consumers may have had didn’t curtail spending in September or October. The September revisions come as consumer confidence that month showed its biggest decline in three years. 

“Retail sales for October inched past economists’ expectations, but it was the September revisions that really stood out,” said Bret Kenwell, U.S. investment analyst at eToro. “It reflects a resilient U.S. consumer even as some economic readings have cast doubt on the economy.”

Hurricanes Shift, But Don’t Slow, Spending Trends

Electronics and appliance sales were up 2.3% on the month, while motor vehicle sales were higher by 1.6%. Sales of sporting goods, furniture, personal care, and clothing items were down in October, which could have been an effect of the storms that hit parts of the country last month, economists said. 

“The impacts of hurricanes Helene and Milton likely affected the pattern of retail sales, boosting auto and building material sales, but holding back spending at a range of other establishments,” said Michael Pearce, deputy chief U.S. economist at Oxford Economics. 

Holiday Spending Could be Slowest in Five Years

While the sales report shows some momentum going into the holiday season, economists aren’t necessarily expecting a blowout performance from retailers.

Economists at Wells Fargo said the October report showed that sales were on pace to meet projections of 3.3% growth for the holiday sales season, the slowest pace of growth in five years.

“With already reported data for the first ten months of the year, we know that consumers are coming into this year’s holiday season in pretty average shape,” wrote Wells Fargo economists Tim Quinlan, Shannon Seery Grein and Jeremiah Kohl. “We expect current conditions to allow for a decent holiday sales season for retailers, but we are still likely to see the slowest pace of annual sales growth since ahead of the pandemic, and we remain cautious on the prospects for spending in the new year.”