Retail sales slow except for cars

November 15, 2024

October retail sales rose 0.4% after an upwardly revised 0.8% the previous month. Core retail sales, which exclude auto sales and gas stations, rose a tepid 0.1%, much less than the expected 0.3%. September sales were revised up to 1.1%.

The overall retail sales figures do not adjust for inflation. After adjusting for price changes in October, retail sales rose 0.2%.

Consumers are spending, but on the heels of discounting. Many have maxed out credit cards or are avoiding card use because of sky-high interest rates. Interest on credit cards rose to nearly 22% in the third quarter, according to the Federal Reserve. The New York Fed's Household Debt and Credit Report, showed also incomes outpacing debt in the third quarter.

Spending at motor vehicle and parts dealers jumped1.6% in October, supported by a rebound in vehicle sales. Unit sales picked up sharply in the Fall; light vehicle sales were 16.0 million in October versus 15.1 million in August on an annualized basis. Vehicle sales to rental car companies picked up in September but not as much to consumers; that trend reversed In October.

Vehicles have been one of the main drivers of deflation in goods prices. In October, new vehicle prices were down -1.3% year-over-year while used vehicles were off -3.4%. Replacement due to hurricane damage is expected to support vehicle sales through year-end. 

Outside of autos, retail sales were mostly flat. Electronics stores were up 2.3%, building material and supply stores were up 1.0% but restaurants and bars were up just 0.7%. Other areas showed weakness following sharp gains in September. Furniture stores fell -1.3%, health and personal care stores fell -1.1%, sporting goods stores fell -1.1% and clothing and accessories fell -0.2%. Miscellaneous store sales, which include everything from florists to pet stores to stationary, fell -1.6%.

General merchandise stores, which include superstores and warehouse clubs, rose 0.6%. That suggests ongoing discounting by big-box retailers continues to attract shoppers to their warehouses. Gains at big-box discounters overshadowed traditional department stores, which fell -0.2%. E-commerce sales jumped 1.5%, the most since June. Sales at the largest online retailers convinced consumers to shop virtually in October.