US: Overall spending to continue to moderate as inflation persists and rates rise

Data released on Friday showed retail sales remained unchanged in September compared to August. Stripping volatile retail segments suggests some modest upward risk to third-quarter goods spending, explain analysts at Wells Fargo. They point out that the report adds to recent evidence that consumer staying power may be waning, but it's showing few signs of breaking.

Key Quotes:

“Consumer goods purchases are slowing, but not collapsing. Inflation-adjusted retail sales have more or less moved sideways for the past year and a half; an impressive feat when inflation is running at a 40-year high.”

“The next few months of spending are going to be influenced by a few factors. As consumers start to spend for the holidays, goods spending may see another near-term boost, and it will likely show up somewhat in the October data as households pull purchases forward. That, however, may be modestly offset by the effects from Hurricane Ian which made landfall in Florida on September 28. This disruption may be more apparent on the services side of spending.”

“Households have broadly looked past elevated inflation and continued to spend by relying on their balance sheets and accumulated savings. We expect overall spending to continue to moderate as inflation persists and tighter monetary policy begins to weigh more meaningfully on consumption.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.