NEW YORK (AP) – Americans continued to spend at a strong pace in September, even amid the shock of stickers in the aisles of grocery stores, parking lots and restaurants, as booming global supply chains slow the flow of merchandise.
Seasonally adjusted retail sales rose 0.7% in September from the previous month, the US Department of Commerce said on Friday. Although this is a larger number than economists expected, concerns are growing about the resistance of buyers as the crucial holiday season approaches, if the price hike continues and frustration grows over the shortage. .
Consumer activity drives about 70% of the US economy.
At this time, however, there is no evidence that Americans are pulling back and last month’s spending was widespread. Sales at clothing and accessories stores increased 1.1%, while those at department stores increased 0.9%. It’s a sign that people are splurging on new back-to-school clothes or back in the office. Buyers also opened their portfolios at sporting goods stores, hobby stores and bookstores where sales rose 3.7%.
Online sales increased 0.6%. Sales at gasoline stations rose 1.8%. And sales in restaurants and bars, many of which believed they were going through the worst of the pandemic until the arrival of the delta variant, rose 0.3% from the previous month.
Part of the increase in spending is caused by rising prices. The United States reported this week that the prices consumers pay grew 0.4% in September and 5.4% in the past 12 months, the fastest pace since 2008. Gasoline, furniture, cars and trips to the grocery store or restaurant have all become more expensive.
âUS consumers still have a long way to go despite some hard-to-find and more expensive items,â Sal Guatieri, senior economist and director of BMO Capital Markets, wrote in a report on Friday.
Guatieri was particularly surprised by Americans’ willingness to continue buying cars, with dealers running out of supplies and manufacturers closing factories due to a lack of essential computer chips. Still, there was a 0.6% increase in sales at auto dealerships, following a plunge last month.
While the spending increases have been significant, the Delta variant has had an influence on where Americans spend money, with more dollars spent on buying things, rather than plane tickets or dinners at the restaurant.
However, the monthly retail report only covers about a third of overall consumer spending and does not include services such as haircuts, hotel stays, and airline tickets. Spending has weakened in some of these areas.
Airlines, for example, have recently started reporting declining ticket sales. They blamed the spread of the delta variant.
âMany of the gains continue to come from shifting spending from services to spending on products,â said Neil Saunders, Managing Director of GlobalData Retail. “Consumers continue to travel, commute and vacation less than they did before the pandemic, and the expenses that would normally be incurred for these activities have found a new place in retail.”
But there are plenty of concerns as the crucial holiday season approaches as retailers grapple with worker shortages and escalating supply chain issues.
Toy companies, manufacturers and clothing companies have been plagued by problems in the supply network, such as a shortage of shipping containers. Some leave a large portion of their merchandise in China until the shipping costs go down.
And hiring has slowed over the past two months, even as businesses and other employers post near record numbers of open jobs. As the end of the year holidays approach, companies are struggling to find workers. About three million people who have lost their jobs and have stopped looking for work since the pandemic have yet to resume their job searches, according to recent economic data.
âThe main concern now is that supply chain disruptions and microchip shortages appear to be spreading, limiting selection and dampening demand for goods,â Guatieri wrote. âIn the meantime, demand for services is being held back by labor shortages, especially in the catering industry. Demand is not the problem, supply is. “
Not worth anything either, while spending was solid in September, it was the weakest growth since March, Saunders said. Momentum will not continue indefinitely, he said, and will continue to decline until it reaches more normalized levels, he said.
“There could be variations in the last few months of the year if consumers decide to spend big to celebrate the holidays, but that will be the exception rather than the rule,” he added.
AP Economics writer Chris Rugaber in Washington contributed to this report.
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