American shoppers continue to drive the US economy as retail spending increased by 0.4% in September, exceeding expectations and beating the previous month’s gain of 0.1%. This positive economic data was met with enthusiasm on Wall Street, with the Dow rising more than 145 points at market open. Additionally, new applications for unemployment benefits saw a significant decline, further indicating a strong economy.
In September, retail sales saw an increase in most categories, with specialty stores, clothing stores, and health and personal care shops experiencing the highest growth. Sales at bars and restaurants also rose, while spending at gas stations declined due to lower gas prices. Excluding gas station sales, retail spending rose by 0.6%, showing consistent consumer confidence in spending despite inflation and recent interest rate hikes.
Consumer spending, which makes up 70% of the US economy, remains strong, with retail sales playing a significant role. The latest data suggests that Americans are still willing to spend, even as interest rates begin to decrease after reaching a two-decade high. This positive consumer sentiment is crucial in preventing a recession and maintaining a stable job market in the country.
The Federal Reserve’s decision to lower interest rates last month was aimed at preventing any potential weakening in the US job market. Fed officials have been focused on lowering rates to support the economy and promote maximum employment, as mandated by Congress. The recent job growth numbers showed a stronger-than-expected performance, easing fears of a deteriorating labor market.
With both the job market and consumer spending remaining robust, the Fed’s future rate cuts may be influenced. Despite doubts surrounding whether the Fed will lower rates in the upcoming months, investors are still predicting a quarter-point cut in November. The overall trend for inflation is expected to remain downward, reflecting the need for cautious monetary policy in supporting various sectors of the economy.
