Consumer Spending up Despite COVID, Supply Chain Issues

You can’t keep the American shopper down.

As The Wall Street Journal reported on Friday (Oct. 15), U.S. consumer spending rose in September, a signal of both rising inflation and durable demand.

Retail sales rose a seasonally adjusted 0.7% between August and September, according to the U.S. Commerce Department, despite a choked-off supply chain and persistent pandemic.

But the rise in sales is also somewhat indicative of higher prices, which rose 0.4% between August and September and 5.4% year to year. Retail sales, which aren’t adjusted for inflation, rose 13.9% from September 2020 to September 2021.

The Journal story says analysts see consumers showing continued resilience into the fourth quarter of 2021.

“We’ve learned to live a bit with the virus,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics. “People still went out to eat at restaurants, but they found outdoor seating.”

The Commerce Department data shows credit card spending at restaurants and retailers — excluding gas stations — rose 1.5% between August and September. Spending at restaurants and bars, in particular, rose 2.3%, which suggests diners were not held off by the delta variant.

Learn more: As COVID Persists, Restaurants Reinvest in Outdoor Dining

Retail sales were up 0.8%, minus the auto industry, which has been dealt a heavy blow by a global computer chip shortage that has hampered auto production and shrunk inventory at dealerships, with car sales falling from their April peak of 18.8 million to 12.6 million last month.

Read more: Apple Eyes Cutting iPhone Production by 10M Units

That chip shortage also led Apple this week to consider cutting its production targets for the iPhone 13 by as many as 10 million units. The company had planned to produce 90 million new phones in the closing months of 2021, but has apparently indicated that the number will be lower. That’s because two of its suppliers, Broadcom and Texas Instruments, haven’t been able to deliver the right number of components.