New government data and reports from retailers show Americans still shopping
AILSA CHANG, HOST:
Our spending habits say a lot about the state of the U.S. economy. And today, we have some new clues about where the economy has been and where it's headed. And people, this actually includes some positive news. NPR's Alina Selyukh is here to give us the update. Hey, Alina.
ALINA SELYUKH, BYLINE: Hello. Hello.
CHANG: Hello. Hello. OK, so what is the top headline here?
SELYUKH: So big picture, we are still shopping a lot. The Commerce Department says retail spending in October rose 1.3% from September, and 8.3% compared to last year. You know, for months we have been saying that any increase in spending has been because of higher prices - we're spending more to buy less. But this report is slightly more optimistic than that. It's the biggest jump in retail sales since February. But people are definitely prioritizing necessities - groceries and gas, where inflation is high. This has meant big gains for Walmart. It's the biggest grocery seller in the U.S. Here's CEO Doug McMillon.
DOUG MCMILLON: Customers that came to us less frequently in the past are now shopping with us more often, including higher-income customers.
SELYUKH: And Walmart is really using food to draw customers. They're promising, for example, to keep the prices of the Thanksgiving meal the same as last year.
CHANG: Mmm. OK, so people are still spending on food. But, I guess, does that mean they're cutting back on stuff that's not quite as necessary? Are we seeing that?
SELYUKH: Yes. So spending at restaurants and bars saw one of the biggest increases for October. That's your food and drink. At stores, a few categories are just not selling well - that's electronics, clothes, sporting goods, furniture. All this really hurt Target. It doesn't have the same grocery draw as Walmart. Target reported a slowdown in sales. Here's CEO Brian Cornell.
BRIAN CORNELL: Consumers are feeling increasing levels of stress, driven by persistently high inflation, rapidly rising interest rates and an elevated sense of uncertainty about their economic prospects.
SELYUKH: A few ways Target saw this was, you know, shoppers really hunting for sales and discounts, choosing smaller package sizes or switching from name brands to store brands.
CHANG: We just heard the mention of rapidly rising interest rates. I mean, they're a piece of this overall picture, right? What can you tell us about how people are responding to interest rates?
SELYUKH: Actually, we got something on this from Home Depot and Lowe's. Might be counterintuitive, but higher interest rates seem to be prompting some home renovations. Both home improvement stores reported higher sales. Of course, rising prices played a role. But also, it's a bad time to be buying a home, so people seem to be fixing up homes they already have.
CHANG: Huh. OK, so what does all of this tell us, Alina, about the kind of shape that family finances are in as we all head into the holiday season, with gift shopping coming up?
SELYUKH: You say head into - I think we're solidly in it.
CHANG: (Laughter) Totally.
SELYUKH: I feel like I was shopping for holiday sales, like, before I finished my Halloween candy.
SELYUKH: Anyways, overall, the National Retail Federation is forecasting a pretty strong holiday spending rate, growing faster than average, with inflation definitely part of it. We know people are increasingly dipping into whatever maybe they saved up during the pandemic or from getting a raise this year or charging their credit cards. And actually, speaking of credit cards, the Federal Reserve Bank of New York said this week that credit card balances recently saw the biggest jump in more than 20 years. They climbed 15% in late summer, early fall.
CHANG: Wow. That is NPR's Alina Selyukh. Thank you, Alina.
SELYUKH: Thank you. Transcript provided by NPR, Copyright NPR.