U.S. retail growth continued modestly in September as consumers moderated their spending after strong summer purchases. The U.S. retail growth indicates that Americans remain resilient, despite facing rising costs for groceries, rent, and imported goods. Analysts said this steady growth may help the economy maintain momentum in the third quarter.
The Commerce Department reported that retail and restaurant sales rose 0.2% in September from the prior month. By comparison, sales jumped 0.6% in both July and August, and 1% in June. Economists noted that government shutdown delays pushed the report more than a month behind schedule.
Despite the modest September increase, U.S. retail growth could lift overall economic expansion to roughly 3% annualized for July through September. This follows a slower 1.6% growth in the first half of the year. Many households are still adjusting to high prices, limiting discretionary spending.
Labor market trends could influence consumer behavior in the coming months. The unemployment rate increased to 4.4% in September from 4.3%, marking the highest level in nearly four years. Economists said rising joblessness could weigh on spending if the trend persists.
Higher-income consumers have driven much of the U.S. retail growth in recent months. Data from Bank of America and reports from retailers such as Walmart suggest lower-income households are focusing on necessities and seeking bargains. This trend underscores widening disparities in consumer spending patterns.
Tuesday’s report arrives ahead of the winter holiday season, when retailers generate up to a fifth of annual revenues. Analysts predict modest sales gains this year, with overall holiday sales expected to surpass $1 trillion for the first time.
Meanwhile, wholesale prices rose 0.3% from August and 2.7% from a year ago, reflecting ongoing inflation pressures. Wage growth remains only slightly above inflation, with September wages increasing 3.8% compared with a year earlier. Analysts warned that slower wage gains for lower-income households may restrain spending.
The Bank of America Institute reported that the lowest-income third of households saw pay rise just 1% in October, while the highest-income third gained 3.7%. Experts say this growing gap could shape consumer trends and influence the trajectory of U.S. retail growth in the months ahead.
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