By Nathalie Voit
New data released by the Commerce Department on Nov. 16 revealed greater spending by American consumers last month across a broad range of retail and food services. The news comes amid a 30-year high inflation rate that sent the value of the U.S. dollar tumbling.
According to the October 2021 Monthly Retail Trade and Food Services report, U.S. retail sales, including online stores and restaurants, rose by a seasonally adjusted 1.7%. Compared with October, retail sales in September rose by only 0.8%. The data shows U.S. shoppers continuing to spend aggressively despite lingering fears over COVID-19 and “sticky” inflation.
Online shopping drove the surge in retail sales last month. Online retail spending in October rose by 4%, up 10.2% from one year ago. Sales in gas stations increased 3.9% last month, pushed higher by soaring gas prices. Gasoline sales have nearly doubled over the year (+46.8%). Other gains occurred in auto dealerships (+1.8%) and grocery stores (+1.1%). Restaurant and bar sales remained flat in October, despite rising 29.3% from last year.
Spending particularly picked up in the appliances and electronics department, which recorded a 3.8% increase over the month. Hardware store sales also rose significantly by 2.8%. Auto dealerships saw sales increase by 1.8%.
Overall, retail sales are up 16.3% from October 2020, Commerce Department data reveals.
The retail sales numbers caught many economists by surprise. A recent survey released by the University of Michigan revealed a 10-year low in consumer confidence as inflation surged to its highest reading since 1990. The Consumer Sentiment Index for November 2021 settled at 66.8, down 6.8% from October and 13.1% over the year.
According to Richard Curtin, the survey’s chief economist, November’s preliminary results were the worst in over a decade.
“Consumer sentiment fell in early November to its lowest level in a decade due to an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation,” said Curtin.
Despite falling consumer sentiment, shoppers continued to brave the high prices and spend in bulk.
“So much for soft consumer confidence signaling slower growth; what people do is much more important than what they say,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote.