Retail Sales, Card Data Point To Continued Consumer Spending Rebound

The latest retail sales numbers indicate U.S. consumer spending is up, with increases in categories across the board. 

The main driver of the economy – that would be consumer spending – remains intact.

The latest reading of retail sales, released by the Commerce Department on Friday (Oct. 16), showed a rise of 1.9 percent in September over August, to $549.3 billion, outpacing expectations of a 70 basis point rise. Measured year over year, that tally was up 8.2 percent year over year.

Ex autos, the retail sales were up 1.5 percent, better than the similarly adjusted 40 basis points that had been expected by the consensus of economists.

Those are the headline numbers, of course, but drilling into the data we can see that spending increases have been seen in categories across the board.

There were even some spending categories that saw double-digit increases. Clothing and accessories were up by 11 percent. While there is not much qualitative data contained in the releases, we might guess that spending ramped up on the heels of Labor Day sales, anticipation of cold weather, and even dress codes mandated by various schools doing distance (and in some cases, in-person) learning.

Of particular note — non-store retailers, which includes eCommerce activity. That category was up 23.8 percent from September, up about 1.6 percent from a year ago.

The only categories to see declines included electronics and appliance stores, which stood at $7.7 billion, down a bit from the roughly $7.8 billion seen in August.

Amid reopenings, even food and drinking places saw a resurgence in September, up to $55.6 billion, versus $54.5 billion seen in August on an adjusted basis. But as measured year to date through nine months, that sector is down more than 20 percent year over year, outpaced only by clothing and accessory stores, which saw a 32 percent slump through the same period.

The takeaways are these: We’d seen some improvement in consumer spending during the summer, and the pace of spending has gathered momentum in September.

Triangulating The Data   

A few months of solid results do not a trend make, necessarily. But triangulating the Commerce Department data with recent commentary and numbers from bank earnings reports supports the notion that individual consumers and families have been more sanguine about spending money on goods and services — even with the back and forth on Capitol Hill centered on stimulus packages (also known as the game of “will they or won’t they?”).

Beyond the fact that capital markets are showing traction and trading revenues are soaring at the banks, depending on where you looked, consumer spend, as measured across card activity, was improving sequentially, and in some cases was moving into positive territory. Wells Fargo, for instance, said in its latest report that card fees, an indicator of consumer spending, were $912 million in the third quarter, up from $797 million in the second quarter. Debit purchase volume was $102.9 billion, gaining 11 percent year on year. J.P. Morgan said card spending was down 8 percent year on year but continued to improve through the quarter, and was down only 3 percent year on year in the month of September.

We’re headed into the all-important holiday shopping season, and of course there are any number of factors that could derail the recent positive trends — continued economic pressures, a sustained new wave in the pandemic, even tumult tied to the election. But for now, U.S. consumers seem willing (and able) to keep the wallets and pocketbooks open.