NewsBlack Friday, retail shopping
Dec 14, 2023 10:05 PM EST
Americans unexpectedly increased their spending from October to November as the unofficial Christmas season began, demonstrating the power of buyers despite rising costs.
According to the Commerce Department, retail sales increased 0.3% in November compared to October, when they declined 0.2%. Sales were predicted to fall again in November owing to a variety of factors, including economic uncertainty. Retail sales increased 0.6% when automobile and gas sales were excluded.
American consumers, a major driver of economic development in the United States, went to the stores, purchased online, dined out, or traveled, as they have done for much of the year.
Restaurants, furnishing stores, and internet sales all increased. Clothing and accessory sales increased as well. Electronics, appliance, and department store sales all declined. These values have not been adjusted for inflation.
Even after a record-breaking summer, the desire to spend on Americans looks to have some wiggle space. Consumer expenditure increased over the July-September period.
Economists predict that spending will decelerate in the last three months of the year as credit card debt and delinquencies increase and savings decline. Even while inflation is decreasing, prices at restaurants, auto dealerships, and other places remain higher.
Employers added 199,000 jobs in November, according to figures released last week, and the unemployment rate fell to 3.7%. Inflation has dropped from a worrying 9.1% to 3.2% in just over a year.
While inflation remains over the intended level, most analysts believe the economy will avoid the recession that many had predicted, a potential side consequence of the United States' efforts to reduce inflation.
Despite this, many Americans remain pessimistic, according to the University of Michigan's Index of Consumer Sentiment. The preliminary December data released on Friday revealed that sentiment has improved as more consumers perceive inflation slowing.
Stores have been aggressively reducing holiday items. Mark Cohen, head of retail research at Columbia Business School, feels that retailers have increased their sales to entice customers to buy.
According to Ted Rossman, senior industry analyst at Bankrate, credit card balances and rates are at all-time highs. This has raised some concerns about people's propensity to take on debt while borrowing costs remain relatively high. Given some of the news coming from retailers, Thursday's high retail statistics were especially surprising.
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In the most recent quarter, merchants such as Walmart and Macy's said that buyers were becoming more discriminating in their purchases as the holiday shopping season neared.
Walmart drew bargain-hunters, but its hopes for the future were low. Target sales fell despite the fact that the retailer performed better than many industry observers predicted. Home Depot's sales also declined as customers postponed home improvements as well as purchases of large-ticket products such as appliances and other commodities frequently purchased using credit cards.
The National Retail Federation, the country's largest retail trade group, predicts that customers will spend more over the 2023 Christmas season than they did last year.
In November, the association predicted that Christmas sales in the United States will increase by 3% to 4% from November to December. This is less than the 5.4% increase during the same period last year, but it is in line with the 3.6% average yearly holiday increase from 2010 to pre-pandemic 2019.
Even as sales have gotten more spread out, Black Friday was projected to be the largest day of the season once again. According to Sensormatic Solutions, which measures shop traffic, retailers still have six of the top ten busiest days of the season ahead of them, including December 26. According to the report, the top ten busiest shopping days in the United States account for about 40% of all Christmas retail traffic.
Ethan Chernofsky, vice president of marketing at Placer.ai, which analyzes people's travels using smartphone data, said Black Friday traffic was heavy. However, other customers will wait for better discounts closer to the holiday.
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