Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or to subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.
Retail sales rose a moderate 0.4% in October, but only 0.1% if you exclude motor vehicles and gasoline. However, “core” sales in September were revised up to a very strong 1.2% rise, so the slight October pickup means that September’s high level is being maintained. This indicates that consumers don’t appear ready to pull back their spending yet.
Among categories of sales, electronics and appliances jumped, reversing most of their decline in September. Health and personal care, sporting goods, clothing and miscellaneous stores gave back part of the strong gains they made the previous month. E-commerce rose only a little after a strong September.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Restaurants had yet another strong month, rising 0.7% following a 1.2% gain the previous month. Consumer spending on eating out tends to reflect whether consumers are feeling pinched or not, so the pickups could indicate further gains in overall spending.
Motor vehicle sales were strong in October, rising 1.6%. However, some of this strength could be the result of vehicle replacements after Hurricanes Helene and Milton in the Southeast in late September and early October. The hurricanes could have juiced building materials sales as well, both before and after. These sales rose 0.5% in October, following 1.0% in September. This category will likely do well the rest of this year.
Consumer spending on services excluding restaurants rose a moderate 0.5% in September, the latest month for which data are available. Spending on services has been pretty consistent, with 0.5% increases in five of the past six months. It is expected that these moderate increases will continue.
A gradually cooling labor market is likely causing consumers to think about boosting their savings. However, don’t expect any sudden pickup in the savings rate. That only occurs when unemployment rises sharply and consumers start worrying about losing their jobs. But saving rates have been lower than the historical norm and may begin to rise slowly, which would cut into the cash available to support future retail spending. Still-high interest rates on consumer loans will likely continue to dampen lower-income households’ spending power, too.
Related content
-
Will Utah Stop Taxing Social Security Benefits?Retirement Taxes Utah Gov. Spencer Cox wants to end the state's tax on Social Security income.
-
IRS Shakeup? What Trump's Commissioner Pick Could Mean for TaxesIRS An unconventional nominee comes amid broader efforts to reshape the IRS and tax policy in 2025.
-
Don't Sleep on Japan's Economic TransformationThe Letter After almost three lost decades, Japan — one of the world's biggest economies — is finally showing signs of life.
-
Kiplinger Outlook: Telecom Companies Brace for Tough TimesThe Letter The telecom industry is entering a new era that threatens profitability. But the coming Trump administration will make it easier for the major players to adjust.
-
Start-ups Trying to (Profitably) Solve the World’s Hardest ProblemsThe Letter More investors are interested in companies working on breakthrough science to tackle huge societal challenges. The field of deep tech has major tailwinds, too.
-
Will lower mortgage rates bring relief to the housing market?The Kiplinger Letter As mortgage rates slowly come down here's what to expect in the housing market over the next year or so.
-
The Big Questions for AR’s FutureThe Letter As Meta shows off a flashy AR prototype, Microsoft quietly stops supporting its own AR headset. The two companies highlight the promise and peril of AR.
-
China's Economy Faces Darkening OutlookThe Letter What the slowdown in China means for U.S. businesses.
-
AI Start-ups Keep Scoring Huge SumsThe Kiplinger Letter Investors continue to make bigger bets on artificial intelligence start-ups, even for small teams with no revenue. Some backers think a startling tech breakthrough is near.
-
Should We Worry About the Slowing U.S. EconomyThe Letter With the labor market cooling off and financial markets turning jittery, just how healthy is the economy right now?
