Economists surveyed by Reuters and The Wall Street Journal expected a 0.2 percent increase. Compared to October last year, retail sales advanced 3.1 percent.
Spending on big-ticket items was mostly down with the exception of vehicle sales, which rose 0.5 percent. Spending on furniture and home-furnishing sales dropped 0.9 percent, the biggest monthly decrease since December 2018, according to the Commerce Department. Sales of electronics and appliances were down 0.4 percent, building materials dropped 0.5 percent and clothing stores declined 1.0 percent.
Consumer spending was up an annualized rate of 2.9 percent in the third quarter and accounts for almost 67 percent of U.S. economic output.
The positive news eased fears in the financial markets that a recession was looming. Federal Reserve Chair Jerome Powell told lawmakers on Thursday (Nov. 14) that “the U.S. economy is the star economy these days … there’s no reason that can’t continue.”
The Federal Reserve cut rates three times in 2019 starting in July, which was the first time for a rate reduction since 2008. The central bank indicated that rates would likely remain unchanged for the near future.
The sales data aligns with the country’s low unemployment, which is at its lowest in almost a half-century.
For many retailers, especially those focused on eCommerce, the next several weeks are crucial. The holiday shopping season, stretching from Black Friday and beyond, can account for a significant amount — even a majority — of an eCommerce firm’s top line.
Firms with supply chains that include Chinese vendors could have a tough time because of the ongoing uncertainty over tariffs between the U.S. and China. Many Chinese suppliers are demanding 100 percent upfront payments for inventory, when terms had once been more favorable for U.S. firms, requiring 20 percent of the cost paid upfront and the remainder on delivery.