Retail sales in the US increased by 0.7% in November, exceeding expectations and signaling a healthy economy. The growth was primarily driven by automobile sales, potentially influenced by hurricane-related vehicle replacements. This positive trend may lead the Federal Reserve to adopt a more cautious approach to interest rate cuts next year.
WASHINGTON — Consumers stepped up their spending at retail stores last month, providing a boost to the economy in the early phases of the winter holiday shopping season.
The boost in spending underscores that the economy is still growing at a healthy pace even with higher interest rates, a trend that could cause the Federal Reserve to lower borrowing costs more slowly next year than they have previously signaled. The Fed will announce its latest rate decision Wednesday.
Sales rose modestly at stores selling furniture, electronics, and building materials. Since the retail sales report isn't adjusted for inflation, some of the increase reflects higher prices. Sporting goods stores reported a 0.9% gain. Sales at online retailers jumped 1.8%.On Wednesday, the Fed is expected to cut its key rate for a third time this year, after a big half-point cut in September and a quarter-point last month.
Analysts envisioned a solid holiday shopping season, though perhaps not as robust as last year’s, with many shoppers under pressure from still-high prices despite the easing of inflation. Overall, retailers had a decent start to the unofficial kickoff to the holiday shopping period despite lots of discounts and sales that started as early as October.
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