Holiday Shopping Season Off to a Strong Start
The American consumer is showing remarkable resilience, with November retail sales exceeding Wall Street expectations. This surge in spending indicates a promising start to the holiday shopping season in the US. Retail sales rose 0.7% in November, outpacing economists’ forecasts of a 0.6% increase.
Motor Vehicle and Online Sales Drive Gains
A significant 2.4% month-over-month increase in motor vehicle and auto parts sales, combined with a 1.8% rise in online sales, propelled the growth. While November sales, excluding auto and gas, rose 0.2%, falling short of consensus estimates, the control group – which excludes volatile categories and influences the gross domestic product reading – increased by 0.4%, meeting expectations.
Economists Weigh In
Capital Economics North America economist Bradley Saunders notes that the report reflects “consumer resilience,” with broad-based strength evident in the control group sales. Wells Fargo senior economist Tim Quinlan predicts a “decent” holiday season for retailers, but cautions that consumer spending may slow in 2025 due to potential new tariffs and price pressure.
Economic Outlook
The report arrives as investors closely monitor the US economy’s health and the Federal Reserve adjusts its interest rate policy. Despite some warning signs, economic data has largely exceeded expectations, a positive sign for investors. Markets are now shifting to accept that the Fed may not cut interest rates as quickly as initially hoped.
Federal Reserve Update
Investors await the Federal Reserve’s latest Summary of Economic Projections and a press conference from Chair Jerome Powell on Wednesday. As of Tuesday morning, markets were pricing in a 97% chance of a 25-basis-point interest rate cut on Wednesday.
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