Americans kept spending in October, but at a slower pace than previous months. The Commerce Department reported Tuesday that retail sales rose 0.3% last month. That’s much smaller than the increase in September, which was downwardly revised, and less than what economists had expected.
Sales of apparel and sporting goods fell more than 4%. Even grocery sales slumped, as did restaurant receipts. But Amazon’s “Prime Day” shopping extravaganza helped drive sales at online merchants up 3%.
Restraining overall sales growth last month: the resurgence in new COVID-19 infections and declining household income. A federal weekly unemployment supplement has lapsed. Millions of freelancers and gig workers will soon lose government-funded benefits next month. And another government benefits program will lapse at the end of December. Amid those concerns, consumer sentiment unexpectedly fell in early November.
For the rest of the year, economists expect moderate growth in retail sales. That will contribute to slower economic growth following the sharp, historic rebound in the third quarter. The frail economy and the health crisis are major challenges facing President-elect Joe Biden when he moves into the White House in January.