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U.S. shoppers pulled back on spending in November compared to October, in the biggest dip in almost a year. And for once, lower prices and sales seem to be part of the story.
Retail spending declined 0.6% last month as holiday shopping kicked into gear, according to the latest report from the U.S. Commerce Department. In October, retail sales had increased 1.3%.
Compared to a month earlier, people spent less on cars and gas, clothes and sporting goods, furniture and electronics. At the same time, spending kept climbing at grocery stores and at restaurants and bars.
All this happened as inflation appeared to slow down. Prices have been easing in many of the same categories: cars, gas, furniture and appliances. In November stores also pushed big sales — on clothes, TVs, computers and smartphones — as they faced a persistent glut of inventory.
More people also shifted their spending to activities. This, too, may account for some of the retail-spending decline. People are commuting and traveling, going out to eat and party, slowly going to back to more services than goods.
“If you look very closely at the details, today’s retail sales report actually tell the story of a consumer that is way more engaged in the real world service economy compared to a year ago,” Wells Fargo economists wrote.
Of course, many people have also tightened their shopping budgets in response to inflation. Stores like Walmart and Target, for example, say they have watched shoppers pull back from discretionary items, like clothes and home decor while they spent more on necessities, like food and gas.
Compared to a year earlier, shoppers did spend more in November, by 6.5%, but that does lag the inflation rate, which was 7.1% last month. Spending was up 16% at gas stations, almost 9% more at grocery stores and 14% more at bars and restaurants.
And it’s worth noting that this November is being compared to last November, when people were in the midst of an almost two-year pandemic shopping frenzy. This holiday season, the National Retail Federation still expects shoppers to spend between 6% and 8% more than they did last year.