Retail sales jumped 1.7% in October
Also on Tuesday, two major retailers, Walmart and Home Depot, reported strong results for their final quarters, reinforcing the view that consumers have absorbed higher prices. The reports follow other data that shows signs of life in the US economy. Earlier this month, the Labor Department reported that hires in October jumped after a summer lull, which could also help boost sales.
Understanding the supply chain crisis
But spending, which is a key driver of economic activity in the United States, remains threatened by shortages and rising prices. Consumer prices jumped 6.2% in October from a year earlier, its fastest pace in three decades, according to the Consumer Price Index, and the cost of food, from the gasoline and other essential household items grew even faster.
Manufacturing giants, including Procter & Gamble, Nestle and Danone, have raised prices for food and cosmetics this year, blaming rising costs on supply chain constraints.
Large retailers, such as Walmart and Home Depot, have started chartering their own ships to bypass sea congestion. Walmart reported that supply chain issues and labor costs were driving up expenses, but were being offset by sales growth. Walmart said in its quarterly earnings report on Tuesday that its revenue grew 4.3% in the three months ending October, while Home Depot said sales rose 9.8% to 36 , $ 8 billion in the third quarter compared to the same period last year.
This price increase has had a negative impact on consumers’ expectations for the future. A recent University of Michigan survey, which measures consumer expectations and optimism about the economy, showed sentiment has fallen to its lowest level in a decade.
Even the early start of holiday shopping is a risk to future sales, said Michelle Meyer, head of the US economy at Bank of America.
“If the holiday shopping season is earlier and shows strength at the start, one might fear that at the end of the season there will be a decrease in demand, especially as prices continue to fall. increase, âMs. Meyer said.