Data released by the U.S. government on Thursday showed a drop in retail spending in November.
According to the data, spending declined by .6% compared to October. The decline was especially pronounced for commodities such as electronics and automobiles.
Spending at grocery stores increased by .8%, but some of that increase could be attributed to inflation. But the drop comes after months of gains by national retailers. There has been a 6.5% increase in spending at retailers since last year.
The National Retail Federation suggested that consumers are spending on household priorities going into the holiday season.
“Consumers continued to spend on household priorities and holiday gifts for loved ones this November despite continued inflation and rising interest rates,” NRF President and CEO Matthew Shay said. “Holiday shoppers are demonstrating resilience, and retailers are providing great products and experiences at the right price levels to help stretch household budgets.”
The NRF’s data analysis indicates that the U.S. is avoiding going into a recession despite high interest rates.
“While job and wage gains and built-up pandemic-era savings supported holiday shoppers in November, shoppers were squeezed by inflation and higher interest rates,” NRF chief economist Jack Kleinhenz said. “This was the first leg of the official holiday season and had a large hurdle to overcome with monthly comparisons because of early shopping in October, but the consumer remains surprisingly resilient. The healthy year-over-year comparison is more important and clearly shows that the economy is not in a recession.”
The Federal Reserve indicated on Wednesday that more rate hikes could be expected in the future as a tight job market could keep wage increases elevated. The Fed said it wants to lower inflation to 2% a year, down from the current marker of 7.1%. However, labor is the biggest expense facing most companies, and government data indicate average wages have increased by over 5% in the last year.