Due to the continuous willingness of American consumers to spend, retail sales in October steadily increased, indicating that the US economy still has ample momentum before the arrival of the holiday shopping season.

On Thursday, US retail sales in October recorded a monthly rate of 0.4%, higher than the expected 0.3%, with the previous value revised up from 0.4 to 0.8%. Excluding automotive data, retail sales only grew by 0.1%.

Better-than-expected retail sales data led traders to reduce bets on a rate cut by the Federal Reserve in 2025.

The report shows growth in 8 out of 13 categories, with the largest increase seen in electronics and appliance stores. Auto sales saw the strongest growth in three months. The growth of e-commerce was more moderate, possibly due to Amazon's Prime Day discounts, as well as similar promotions by Walmart and Target.

Upward revisions indicate that consumers are entering the last few months of this year with strong momentum, which may signal a robust holiday shopping season. However, inflation remains stubborn, and some retailers are considering raising prices in anticipation of higher tariffs on imported goods by President-elect Donald Trump.

USA consumers have maintained a good growth momentum this year. Due to upward revisions of previous data, this report appears stronger than it seems. Adam Button, an analyst at the financial website Forexlive, stated that these data continue to indicate that despite high interest rates, consumer spending remains resilient as the holiday peak season approaches. The control group data included in GDP calculations suggests stable consumer demand in the fourth quarter. Growth in the food service industry indicates that consumers continue to spend on services, which are particularly sensitive.

Retail sales account for about one-third of all consumer spending and provide clues to economic strength.

Since this spring, the US economy has grown faster than expected, largely attributable to strong consumer spending, which is the pillar of the US economy.

Some spending is a result of rising inflation, but Americans have stable jobs and relatively small debts, enabling them to increase spending.

However, surprisingly strong economic resilience may force the Federal Reserve to slow down the pace of interest rate cuts, leaving homebuyers and car buyers waiting for prices to become more affordable very frustrated.

Scott Helfstein, the head of Global X Investment Strategy, believes that this data may be more valuable for the Federal Reserve and investors than the CPI released on Wednesday: "In a slightly soft labor market, consumer health is a key issue for the upcoming earnings season and possible tariff increases."

However, some economists are concerned that the slowdown in October sales may exceed expectations. Aditya Bhave, an economist at Bank of America, stated that reduced discretionary spending on goods in states affected by Hurricane "Milton" and unfavorable seasonal adjustments could actually lead to a decrease in retail sales.

The low unemployment rate has largely supported consumer spending, and the rebound in the stock market and high housing prices have also played an additional role in boosting household balance sheets. Household savings remain high. There are concerns that the growth of the economy in the usa is primarily driven by middle and high-income households, which are more flexible and substitutable in their consumption.

However, data from bank of america's credit cards shows that spending is elastic across different income groups. Aditya Bhave, an analyst at bank of america securities, stated, "We have not seen any signs of increased reliance on credit cards across income groups." "However, we note that high-income households seem to perform better in certain service industries such as aviation, lodging, entertainment, and cruises."

Editor/Lambor