American shoppers boosted their spending on vehicles,
clothing and many other goods in September, a bright spot amid signs the
economic recovery remains fragile.
Retail sales, a measure of purchases at stores, restaurants
and online, rose a seasonally adjusted 1.9% in September from the prior month,
the Commerce Department said Friday.
The gain marked the fifth straight month of retail-sales
growth, as consumers prepared for further months of working and studying from
home by spending on sporting goods, home improvement and furniture.
“We continue to sell the consumer short,” said Stephen Stanley,
chief economist at Amherst Pierpont Securities, noting the surprising strength
in the retail sales numbers. “It should be a pretty solid holiday season” for
gift-giving, he added.
Consumer spending is the main engine of the U.S. economy,
and overall expenditures remain below pre-pandemic levels because outlays on
in-person services such as dentist’s visits, travel and sporting events haven’t
fully rebounded.
Gregory Daco, chief U.S. economist at Oxford Economics, said
September retail-sales were “very encouraging” but added, “the problem is, when
we look out across the horizon, the outlook is much less rosy for consumers.”
He pointed to struggling services providers and the impasse between Congress
and President Trump over another trillion-dollar-plus coronavirus relief
package.
Other recent economic data indicate the economy is losing
steam. Monthly job gains have slowed in recent months. New applications for
unemployment benefits, a proxy for layoffs, rose last week to the highest level
since late August. U.S. industrial production—a measure of output at factories,
mines and utilities—fell a seasonally adjusted 0.6% in September, snapping four
months of growth, the Federal Reserve said Friday.
The University of Michigan’s consumer-sentiment index ticked
slightly higher in early October. Still, the survey found that slowing
employment growth, a resurgence in coronavirus infections and the absence of
additional federal relief payments prompted consumers to become more concerned
about their current economic conditions.
JPMorgan Chase & Co.’s tracker of credit- and debit-card
transactions showed spending was down 5.7% compared with a year ago through the
week ended Oct. 12.
Still, economists say the high rate of personal
saving—consumers socked away 14.1% of disposable income this August compared
with 7.3% a year earlier—has given households fuel to spend, despite the cut to
an extra $600 a week in jobless benefits at the end of July.
“Inch by inch, consumers are feeling better even though we
have this pandemic hanging over us,” said Jack Kleinhenz, chief economist at
the National Retail Federation, a group that represents retail stores. “The
fact that there is less spending on services like travel, some of this money is
available and going into retail cash registers,” he added.
Craig Johnson, president of Customer Growth Partners, a
consulting firm, said “September is kind of a hinge month” for retail sales,
between the back-to-school and holiday seasons. He added that this year’s
back-to-school season pushed further into September because many schools
delayed opening for in-person classes, giving sales of academic supplies and
clothing a second wind.
The coronavirus pandemic has prompted retailers to encourage
an earlier start to the holiday season this year, both to avoid crowds at
stores and ease pressure on shipping and supply chains. Amazon.com Inc.’s Prime
Day sales event this week propelled consumers to spend billions more online,
kicking off an end-of-year shopping season that is expected to be dominated by
e-commerce shopping.
Categories related to the booming housing sector performed
well in September, according to Friday’s report, with sales at home-improvement
and furniture stores both increasing last month. Home buyers have been rushing
to get more living space in recent months as many Americans anticipate working
from home for a while.
Laura Harrison and her husband, Drew, bought a home in
Nashville, Tenn., in July because they wanted more space, including an office
for Ms. Harrison, who worked from home before the pandemic.
They have faced “lots of expenses we weren’t prepared for”
related to their house purchase, such as furnishings. “We’d gotten to a place
where we were really debt-free, and buying a house set us back a bit more than
we thought beforehand.”
Ms. Harrison has also noticed creeping inflation, with
gasoline and food costs rising.
“It’s just all those little things, those daily things that
seem to have gone up even though pay hasn’t gone up,” said Ms. Harrison, who
works as a media planner for a TV company.
Sales at motor-vehicle dealerships, which make up about 20%
of total retail sales, rose by a robust 3.6% in September.
That is partly related to consumers shunning public transit
because of high Covid-19 infection rates and rising vehicle prices, according
to economists.
Unlike other economic data reports produced by the U.S.
government, retail sales aren’t adjusted for inflation.
Write to Harriet Torry at harriet.torry@wsj.com.
Corrections & Amplifications
The Labor Department reported the September consumer-price
index Tuesday. An earlier version of this article incorrectly said it was
released last week. (Corrected on Oct. 16.)
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