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.
It was a stronger performance than expected. Still, concerns persist about the resilience of buyers if prices continue to move north and shortages cause frustration as the crucial holiday season approaches.
Consumer spending accounts for about 70% of all economic activity in the United States, and a full recovery from a pandemic-induced recession will require their participation.
There is no evidence Americans are pulling out, however, and spending the past month has been heavy everywhere from clothing, sporting goods and toy stores to parking lots.
âThey come to enjoy the experience with their family that they haven’t been able to have for a long time,â said Tiffany Markofsky, marketing manager for a small chain of toy stores called Camp.
Camp reports heavy traffic in stores and was able to obtain hot toys through close ties with its suppliers, Markofsky said.
Part of the increase in consumer spending is a direct result of soaring prices. A gallon of gasoline now costs about $ 1 more than it did this time last year, so in many cases Americans don’t buy more, they just pay more.
The United States reported this week that the prices paid by consumers 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 lot of it in the tank 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.
Online sales edged up as shoppers felt more comfortable shopping in physical stores. Sales at gasoline stations rose 1.8%. Tellingly, restaurant and bar sales were virtually flat compared to the previous month.
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. But there has been evidence of slowing spending in some of these areas.
Airlines have started to report declining ticket sales and blame 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. âConsumers continue to travel, commute and take vacations less than before the pandemic, and spending that would normally be spent on these activities has found a new place in retail.
Economists predicted an increase of at least 7% in holiday sales, but the pandemic had made forecasting more difficult. The regular sales that have been seen in clothing, technology or other products are not being assured due to labor shortages and supply chain issues.
The global supply chain is so blurred that many producers are leaving a large chunk of their goods in China until the shipping costs go down.
And hiring has slowed in the past two months even as employers post a near record number of open jobs. According to recent economic data, around three million people who have lost their jobs and have stopped looking for work since the pandemic have not yet resumed their job searches.
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 restaurants. It’s not the problem, it’s the supply.
President Joe Biden told Americans this week that his administration is confident inflation is under control and announced a deal to expand operations at the Port of Los Angeles to address supply issues.
The willingness to spend on these products is there, as evidenced by September, but it is also the weakest sales growth since March, Saunders said. The momentum will not continue indefinitely, he said, rather it 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 splurge on the holidays, but that will be the exception rather than the rule,” he added.
Small businesses and national chains well aware of constricted supply lines are now trying to get people to stores through the use of early holiday promotions in hopes of avoiding missed holiday shipping deadlines. .
Target typically launches a holiday price comparison program in early November to gain customers. This year’s offer is already full.