Data Shows Optimistic Signs For American Economy

Thanksgiving shopping started quickly despite substantial discounts, leading to a surprise uptick in U.S. retail sales in November. This bodes well for the economy’s modest growth trajectory this quarter and helps allay recession worries.

Consumers’ resiliency in the face of a robust job market was highlighted by the Commerce Department’s announcement of a resurgence in retail sales, which raised concerns about the market’s anticipation of rate reduction as soon as next March. On Wednesday, the Federal Reserve kept interest rates unchanged and hinted in fresh economic predictions that the record monetary policy tightening of the last two years is coming to a close, with lower borrowing costs on the horizon in 2024.

Last month’s retail sales were up 0.3%, while October’s numbers were revised to reflect a 0.2% decline rather than a 0.1% drop. According to a Reuters survey of economists, retail sales were expected to decline by only 0.1%. November sales were up 4.1% year-on-year, although that’s down from earlier this year as consumers adapted to rising pricing and borrowing expenses. With gas costs down, consumers have more disposable income to spend on other things, and retailers are providing steep discounts in the lead-up to the Christmas shopping season.

Retail sales grew 0.4% last month, excluding food, fuel, construction, and vehicle services. The consumer spending component of GDP correlates closely with core retail sales. After a 3.6% increase in Q3, economists anticipate a slowdown to 2% annualized growth in inflation-adjusted consumer expenditure in Q4. Before these numbers were released, the Atlanta Fed had projected a GDP growth rate of 1.2% for Q4 before inflationary pressures were detected.

In the third quarter, the economy increased at a pace of 5.2%. The employment market is still producing new positions at a solid pace, which supports consumer spending and the economy as a whole.