Retail sales likely increased in September for the fifth month in a row, as consumers prepared for further months of working and studying from home by spending at home-improvement stores and on appliances and vehicles.
“September is kind of a hinge month” between the back-to-school and holiday seasons, said Craig Johnson, president of Customer Growth Partners, a consulting firm. 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 school supplies and computers a second wind.
Economists surveyed by The Wall Street Journal predicted that retail sales increased a seasonally adjusted 0.7% in September from a month earlier. That would mark a slight increase from the 0.6% increase recorded in August.
Still, other data indicate the economic recovery is losing momentum. Overall consumer spending remains below prepandemic levels because outlays on in-person services such as dentist’s visits, travel and sporting events haven’t fully rebounded. 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. And more workers are reporting their layoffs are permanent.
Blerina Uruci, an economist at Barclays, noted how strong consumer spending is for durable goods.
“It’s a shift from services that in many ways is forced because people have to be more cautious due to the [coronavirus] pandemic,” she said.
Retail sales, a measure of purchases at stores, restaurants and online, returned to prepandemic levels in June and have pushed higher every month since then. The retail-sales report doesn’t track spending on most services, such as health care and hospitality, which make up the lion’s share of U.S. consumer spending. Unlike other economic data reports produced by the U.S. government, retail sales aren’t adjusted for inflation.
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. Her grocery bill has increased by about $75 to $100 per shopping trip compared with before the pandemic, she said.
“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.
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Sales at motor-vehicle dealerships make up about 20% of total retail sales, and economists expect to see spending on motor vehicles picked up strongly last month.
That is partly related to consumers shunning public transit because of high Covid-19 infection rates and rising vehicle prices, according to economists. The Labor Department last week reported that while the consumer-price index rose 0.2% in September, the index for used cars and trucks jumped 6.7%. New-vehicle prices rose 0.3% from the prior month.
But real-time data from private firms show total consumer spending, which includes outlays for in-person services, is still lower than a year ago.
Credit- and debit-card data collected by Affinity Solutions and research group Opportunity Insights showed that overall spending was down 2.3% at the end of September compared with January levels.
& Co.’s tracker of credit- and debit-card transactions showed spending was down 5.8% compared with a year ago through the week ended Oct. 10.
Write to Harriet Torry at email@example.com
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