US Sales Hurt By Rising Virus Infections And Falling Household Income

The headline print increased less than expected and missed the forecast of 0.5%. The prior reading was revised lower by three-tenths to 1.6%. Analysts cite spiralling new infections and falling household income for disappointing data.

 

The control group – used for GDP calculation purposes and seen by analysts as a more reliable gauge of underlying consumer demand – came in below the estimate of 0.5%, with September’s figure revised lower to 0.9% from 1.4%. Retail sales ex-autos rose 0.2% missing the 0.6% forecast and ex-auto and gas also printed below estimates, rising 0.2% versus the 0.6% projection.

 

Seven of the thirteen major categories posted a decline. The biggest monthly falls were seen in clothing stores, sporting goods, hobby and bookstores, while nonstore retailers showed the biggest increase in October.

 

Economist's View

Jennifer Lee, senior economist at BMO Capital Markets said, "Overall, not an encouraging report but not a shock that consumers needed a breather after a lengthy streak of spending and as savings and some UI benefits start to thin out a bit. This all goes back to the need for continued job growth and steady income gains to support consumer spending. The November report will be more telling about the mood of American consumers, and if they are able to make up for a tough year by creating a more merry holiday season."