US consumer holiday spending should stay strong

US retail sales kept up a long streak of year-over-year gains in October even though the rate of growth continued to slow, says the National Retail Federation (NRF).

“Fourth-quarter consumer spending stepped off on a more moderate pace, as expected,” says Jack Kleinhenz, NRF chief economist. “The staying power of the American consumer has been the story of 2023, but financial conditions have tightened appreciably in recent months, curbing the purchasing power fueled by job and wage gains. Nonetheless, continued consumer resilience is still expected for the holiday season.”

Overall retail sales in October were down 0.1 percent from September but up 2.5 percent year over year. That compared with increases of 0.9 percent month over month and 4.1 percent year over year in September.

Core retail sales as defined by NRF – excluding automobile dealers, gasoline stations and restaurants – were up 3.1 percent unadjusted year over year on a three-month moving average as of October and up 3.7 percent for the first 10 months of the year. Those numbers are in line with NRF’s expectation that 2023 annual retail sales will grow about four percent over 2022.