By Nathalie Voit
Despite rising inflation, American consumers are spending more than ever. Sales at retail stores swelled in September, increasing 0.7% on an adjusted basis from the previous month, according to data released Oct. 15 from the Commerce Department.
Retail sales received a boost from price hikes and strong demand, even as the delta variant of COVID-19 continued to work through communities. The economy is also flush with stimulus money and excess savings driven by weak spending during the lockdown. According to data from the Commerce Department, total household savings top $1.6 trillion, or roughly 10% of consumers’ disposable income.
In addition, wage raises have left Americans with more disposable cash. Hourly wages for private-sector workers rose 4.6% in September from one year earlier, Labor Department data revealed. Median weekly earnings for the country’s 115.3 million full-time wage and salary workers increased by 0.7% from last year to $1,001 in the third quarter of 2021.
While the gains were offset mainly by a 5.3% increase in the Consumer Price Index over the same period, consumers continued to spend at unprecedented levels, splurging on everything from new cars to expensive sporting goods.
“American consumers still have plenty left in the tank despite some tough-to-find and pricier items,” said Sal Guatieri, senior economist and director at BMO Capital Markets.
The spending increases have been broad-based but generally reflect a preference for commodities rather than services, which are still recovering from the latest wave of the virus and ongoing shipping delays.
Spending on clothing increased 1.1% in September. Sporting goods, music, and book sales also increased 3.7%. Similarly, sales in the auto industry rose by 0.5% last month, despite the global chip shortage.
The strong demand has created pressure for store owners and struggling businesses, who must cope with prolonged supply-chain constraints that have left a dent in inventory.
“Not being able to suddenly order one of those higher-end bikes has hurt because we’re missing out on the sale,” says the owner of Black Dog Bikes in Staunton, VA, James Burris, about the shipping backlogs.
Bigger stores are similarly feeling the pressure. Global furniture giant IKEA revealed significant stocking problems amid supply shortfalls in an interview, the Wall Street Journal reported.
“In general, we are struggling to have the goods in the right place at the right time…the problem is very global,” said Tolga Öncü, retail operations manager at Ingka Holding B.V, Ikea’s parent company.
