Retail sales rose at healthy pace last month in latest sign of US economy’s health

WASHINGTON — Consumers ramped up their spending in stores last month, boosting the economy in the early stages of the winter holiday shopping season.

Retail sales rose 0.7% in November, the Commerce Department said said Tuesdaya solid increase and higher than the 0.5% gain in October. Turnover at car dealers rose by 2.6% and provided the majority of the profit. Some of that demand likely reflected the need for new cars in parts of the Southeast hit by Hurricane Helene in October.

The increase in spending underlines that the economy is still growing at a healthy pace even with higher interest rates, a trend that could lead the Federal Reserve to lower borrowing costs more slowly next year than they have previously indicated. The Fed will announce this latest tariff decision Wednesday.

The economy grew at an annual rate of almost 3% in the July-September quarter and some economists are forecasting another solid gain in the final three months of this year. There are some signs of sluggishness in the labor market, as hiring has slowed since last summer, but layoffs are also relatively rare and the unemployment rate is at a low 4.2%. On average, paychecks are growing nationally at a solid pace of 4%, which is modestly faster than inflation and helps fuel spending.

Sales rose modestly in stores selling furniture, electronics and building materials. Because the retail sales report is not adjusted for inflation, some of the increase reflects higher prices. Sports stores reported a gain of 0.9%. Turnover at online retailers increased by 1.8%.

Spending in restaurants and bars, meanwhile, fell 0.4%. Supermarket turnover also fell by 0.2%.

On Wednesday, the Fed is expected to cut its key interest rate for the third time this year, following a major cut of half a point in September and a quarter point last month. But Fed officials, led by Chairman Jerome Powell, are also expected to signal that they will cut rates only two or three times next year, keeping them well above pre-pandemic levels when interest rates on mortgages, auto loans and credit cards were much slower.

The retail sales report comes as retailers step up their offers and other perks to lure customers into their stores for the crucial last mile before Christmas.

Analysts forecast a solid holiday shopping season, although perhaps not as robust as last year, with many consumers pressured by still high prices despite declining inflation. Overall, retailers had a good start to the unofficial kick-off of the holiday shopping season, despite the many discounts and sales that started as early as October.

Adobe reported earlier this month that “cyber week” – the five-day period from Thanksgiving to Cyber ​​Monday – generated a total of $41.1 billion online, up 8.2% from the same period a year ago. Adobe expects holiday sales – November 1 through December 31 – to reach $240.8 billion, up 8.4% from a year ago. And Mastercard SpendingPulse, which tracks personal and online spending, reported that total Black Friday sales, excluding cars, rose 3.4% from a year ago.

This year, retailers are feeling more pressure because there are five fewer days between Thanksgiving and Christmas. In addition, the presidential election caused some shopping distractions, causing general merchandise sales to fall 9% in the two weeks ending Nov. 9, according to Circana, a market research group.

Sales have recovered, but stores will still have to make up for these losses. But there are big shopping days forward. In the United States, the 10 busiest shopping days account for about 30% to 40% of all holiday store traffic, according to Sensormatic Solutions, which tracks foot traffic in stores. And five of the 10 busiest days of the holiday season are still ahead, including the day after Christmas, according to Sensormatic.