Resistant customers are pushing up retail sales by 0.7% in September

NEW YORK (AP) – Americans continued to spend on a solid clip in September, despite facing sticker shock in …

NEW YORK (AP) – Americans continued to spend on a solid cut in September, despite facing sticker shocks in grocery stores, car lots and restaurants as constricted global supply chains slowed the flow of goods.

Retail sales rose a seasonally adjusted 0.7% in September from the previous month, the US Department of Commerce said on Friday.

It was a stronger view that was expected. Still, there are persistent concerns about how resilient shoppers will be if prices continue to hold north and shortages lead to frustration heading into the crucial holiday season.

Consumer spending drives about 70% of all U.S. economic activity, and a complete recovery from a pandemic-induced recession will require their participation.

However, there is no sign that Americans are retiring, and spending last month was heavy everywhere, from clothing, sporting goods and toy stores to parking lots.

“They come to enjoy the experience with their families that they had not been able to for a long time,” said Tiffany Markofsky, marketing manager at a small toy store chain called Camp.

Camp reports heavy in-store traffic and has been able to secure hot toys through close ties with its suppliers, Markofsky said.

Some of the increased consumer spending is the direct result of rising prices. A gallon of gasoline today costs about $ 1 more than it did at this point last year, so in many cases Americans do not buy more, they just pay more.

The United States reported this week that prices paid by consumers rose 0.4% in September and have risen 5.4% over the last 12 months, matching the fastest pace since 2008. Petrol, furniture, cars and trips to the grocery store or restaurant have all become more expensive.

“U.S. consumers still have plenty left in the tank despite some hard-to-find and more expensive goods,” wrote Sal Guatieri, senior economist and director at BMO Capital Markets, in a report released Friday.

Guatieri was particularly surprised by the willingness of Americans to continue buying cars with dealers missing production and manufacturers closing factories due to a lack of important computer chips. Still, there was a 0.6% increase in sales at car dealers, after a decline last month.

Although spending increases have been broad, the delta variant has had an impact on where Americans spend money, with more dollars set aside to buy things, rather than plane tickets or dinners out.

Online sales increased modestly as customers felt more confident shopping in physical stores. Sales at gas stations increased 1.8%. As you know, sales at restaurants and bars were largely flat from the previous month.

However, the monthly retail report covers only about a third of the total consumption expenditure and does not include services such as haircuts, hotel stays and airline tickets. But there have been signs that spending has slowed in some of these areas.

Airlines have begun to report declining ticket sales, and they blame the spread of the delta variant.

“Many gains continue to come from a shift in consumption from services to consumption of products,” said Neil Saunders, CEO of GlobalData Retail. “Consumers continue to travel, commute and vacation less than they did before the pandemic, and the expenses that would normally be incurred for these activities have found a new home in retail.”

Economists have predicted at least a 7% increase in holiday sales, but the pandemic had made predictions more difficult. Stable sales that have witnessed clothing, technology or other goods are not assured due to staff shortages and terrible supply chain problems.

The global supply chain is so encrypted that many manufacturers are leaving the bulk of their goods in China while waiting for shipping costs to recede.

And employment has slowed in the last two months, even though employers are sending an almost record number of open jobs. About three million people who lost jobs and stopped looking for work since the pandemic have not yet resumed job searches, according to recent economic data.

“The main concern now is that supply chain disruptions and microchip shortages appear to be spreading, restricting selection and dampening commodity demand,” Guatieri wrote. “Meanwhile, the demand for services is being held back by labor shortages, especially in restaurants. Demand is not the problem, it is supply. “

President Joe Biden told the Americans this week that his administration is convinced that inflation is under control and announced an agreement to expand operations in the Port of Los Angeles to help resolve supply issues.

The willingness to spend on these items is there, as evidenced by September, but it was also the weakest sales growth since March, Saunders said. Momentum will not continue indefinitely, he said, rather it will continue to decline until it reaches more normalized levels, he said.

“There may be some variation during the last months of the year if consumers decide to go on a big outing to celebrate the holidays, but this will be the exception rather than the rule,” he added.

Small businesses and national chains, well acquainted with strangled supply lines, are trying to get people into the stores now using early holiday promotions in hopes of avoiding missed deadlines for shipping.

Target usually launches a holiday price matching program in early November to win customers. The offer this year is already in full force.

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AP Economics author Chris Rugaber of Washington contributed to this report.

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