The US Consumer Is Alive
The US consumer is alive.
Retail sales in October rose 0.3% from the prior month, beating expectations for a 0.2% increase.
Excluding autos, sales rose 0.3% in October, also better than the 0.2% that was expected by economists.
Against the prior year, retail sales rose 4.1% in October.
Sales at gasoline stations fell 1.5% in October when compared to the prior month, and fell 4% against the same month last year.
Amid the decline in gas prices, many expect retail spending to strengthen as consumers have more disposable income.
But in a note to clients following Friday's report, Ian Shepherdson at Pantheon Macroeconomics said, " In one line: Welcome core rebound, but few signs yet that cheaper gas is boosting other spending."
In a note to clients ahead of the report, Shepherdson said that the pass-through from lower gas prices to increased discretionary spending by consumers would likely not show up in Friday's report.
"A lag is normal, though, and we continue to expect a very strong holiday season," Shepherdson added. "The October gains are broad-based, with the exception of electronics, though the 1.6% drop followed a 4.7% September leap. The hit from gas prices was small, only 0.15% at the headline level; expect a bigger impact in November."
In an email to Business Insider following the report, Stuart Hoffman, chief economist at PNC Financial Services, said Holiday sales should be up 4%-4.5% from last year, the best year-on-year increase since the financial crisis.
Hoffman also expects online sales to rise 12%-14% during the Holiday season, better than the 10% increase last year.
And so after a disappointing September report, a bit of a rebound in October shows that ahead of the Holiday shopping season, the US consumer is showing some signs of life.
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