Surge in Retail Sales Reflects Consumer Living Large

Source: Economics Group of Wells Fargo Bank, N.A. Summary Consumers are spending more at bars & restaurants, at auto dealers and online. That’s true on both a monthly basis and on trend over the past year. Consumers are looking for nothing but a good time, and it is hard to resist seeing the upside risk to the outlook. Living Their Best Life It was another upside surprise for retail sales in September with a 0.7% increase on the month. That was more than double the consensus expectation for a mere 0.3%. The fact that the gain came atop an upward revision to prior months’ sales means no excuses for frustrated forecasters, ourselves included. It has been a pencil-breaking torment to tally the impact of resumed student loans payments, diminished pandemic-era savings and higher cost of credit only to observe the devil-may-care mindset of a consumer that somehow finds a way to keep spending. We have repeatedly under-estimated the U.S. consumer. But in pulling off this spending spree, consumers have dented their household finances, a theme that is evident not only in the diminished savings, but also the trend rise in credit card delinquencies. Consumers have lived their best life over the past year (chart). The top four categories on a trailing 12-month basis are (in descending order) bars & restaurants (+9.2%), ecommerce (+8.4%), drugstores (+8.3%) and motor vehicles and parts (+6.2%) (chart). All four of these categories notched impressive monthly gains of at least 0.8% in September as well. READ FULL ARTICLE >>