Americans cut back sharply on retail spending last month as the holiday shopping season began with high prices and rising interest rates forcing families, particularly lower income households, to make harder decisions about what they buy.
Americans cut back sharply on retail spending last month as the holiday shopping season began with high prices and rising interest rates forcing families, particularly lower income households, to make harder decisions about what they buy.
Retail sales fell 0.6% from October to November after a sharp 1.3% rise the previous month, the government said Thursday. Sales fell at furniture, electronics, and home and garden stores.
Americans’ spending has been resilient ever since inflation first spiked almost 18 months ago, but the capacity of Americans to continue spending in a period of high inflation may be beginning to ebb. Inflation has retreated from the four-decade high it reached this summer but remains elevated, enough to erode the spending power of Americans. Prices rose 7.1% in November from a year ago.
“The weakness in sales … suggests that higher borrowing costs, slower employment growth and an unusually low saving rate are now catching up with consumers,” said Andrew Hunter, senior U.S. economist at Capital Economics.
Consumer spending is still likely to grow at a solid pace in the final three months of the year, Hunter said, but he expects a sharp drop early next year.
Monthly sales data can be volatile and one negative report is often followed by a rebound, other economists said.
