Retail Sales Report: Looking into Consumer Spending | Episode 72 | 11-15-23

Megan Horneman, Chief Investment Officer at Verdence Capital Advisors, breaks down the October Retail Sales Report. Megan focuses on a notable slowdown in consumer spending, particularly on big-ticket items like automotive and furniture. However, while some sectors like electronics and food still show strength, she cautions viewers about the unadjusted nature of these figures. As we approach the holiday season, Megan talks about how the report could suggest challenges for consumers.

Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors, coming to you today with our regular segment of Markets. With Megan, we have some economic data that we've received today. Specifically, the one that we're going to talk about now is the Retail Sales Report. So it was the consumer spending report for the month of October. You remember the month of September was a pretty surprising increase in retail sales. A lot of that had to do with back-to-school shopping and some heavy discounting. However, this month we did see some slowing from the prior month in the retail sales number. Gasoline station sales was a big part of that because gasoline prices were down.

But if you look at some of the other components of this, what we see a trend in is the slowing from consumers on big ticket items. We've seen pretty big weakness in autos, furniture, sporting goods, shopping at department stores. These are all we consider discretionary items. So the high interest rates and slowing economy is starting to show some signs as impacting the consumer. The one the couple areas we saw strength for the month was electronics, food and then health and personal care.

But just keep in mind that these numbers are not inflation adjusted and with some of the inflation data we got yesterday showing that food prices do continue to rise, so that's not necessarily a positive, in our opinion, for the consumer. However, this is a report that's telling us that the consumer is starting to slow spending Coming into the holiday season. It will be a big hurdle to jump over as we do approach the Thanksgiving holiday and then Christmas. We'll keep watching this and we'll get you some more details as we see it needed, but if you have any questions or comments, please feel free to reach out to podcast at Verdence dot com. Thank you.