Retail Sales Drop in October, Marking First Decline Since March
In a sign of potential economic cooling, retail sales in the US dropped by 0.1% in October – the first monthly decline since March, according to the Commerce Department. The decline comes as interest rates hit a 22-year high.
The drop-off in sales was attributed to a decline in big-ticket items such as car sales, which fell by 1.1%, and furniture sales, which declined 2% during the same period. Despite the overall decline, spending at restaurants and supermarkets saw a modest increase.
The Federal Reserve, which has raised interest rates 11 times since March to combat high inflation, sees the decline in retail sales as a positive sign that spending isn’t reaccelerating or remaining stubbornly strong. However, the decline was modest, and there isn’t yet any indication of severe economic weakness.
Economists are expecting the US economy to cool further in the final months of the year, including inflation, under the weight of several economic headwinds. Despite the economic challenges, progress is being made, as inflation at the wholesale level cooled off in October and the US economy expanded at a scorching 4.9% annualized rate in the third quarter.
While the decline in retail sales is potentially an early sign of a slowing economy, economists are cautioning that one month’s data doesn’t make a trend. However, the Federal Reserve sees this as a positive indication that their restrictive monetary policy stance is reducing inflationary pressures.