rted on an upbeat note, with retail sales growing by a solid 0.3 percent last month, the Census Bureau reported Friday.
Shoppers snapped back after staying away from the malls and pulling sales down by 0.3 percent in September. The gain in October came despite a steep fall in gasoline prices that caused a drop of 1.5 percent in gas station sales for the month. September’s slumping sales also reflected depressed spending at gas stations.
Excluding gas and auto sales, retail sales were up by a robust 0.6 percent last month. Gains were particularly strong at sports outlets, personal care and beauty stores, restaurants and car dealers. Consumers took a break from their ongoing fascination with the latest mobile phones and other technical gadgets, sending sales at electronics stores down by 1.6 percent.
“This shows an initial impact of the boost to consumer spending power and sentiment from plummeting gasoline prices,” said Ted Wieseman, economist at Morgan Stanley. “We anticipate that will continue into the key holiday shopping period.”
Consumer confidence has soared to levels not seen since before the Great Recession of 2007-2009, as gasoline prices crossed below the $3 threshold and plummeted to $2.91 a gallon on average, according to AAA estimates.
Mr. Wieseman noted that since last month, gas prices have continued to plummet and are down by 50 cents since the summer, and thus will continue adding mightily to consumer spirits and spending power in the weeks ahead.
While consumers have been cautious about spending their growing incomes and windfall savings at the pump, “we’d be surprised if some portion of the further ongoing acceleration in income growth doesn’t get spent in the upcoming holiday shopping season,” he said.
Chris Williamson, chief economist at Markit, was also impressed with the pickup in consumer spending at the outset of the holiday season.
“The U.S. economy has entered the fourth quarter with robust momentum,” and is in a “better shape than many had hoped a month ago,” especially in light of the decline in economies elsewhere in the world from China to Brazil and Europe, he said.
Retailers were pleased with consumers getting a fast start out the gate for the all-important Christmas shopping season, when about a quarter of all sales are made in the U.S.
The “solid performance” in October “indicates a healthy holiday shopping season ahead,” said Jack Kleinhenz, chief economist at the National Retail Federation.
He said retailers have noticed consumers getting “a boost from plunging gas prices and accelerating job growth,” as well as a small creep up in wages and salaries this year.