Report: US Retail Sales Drop Sharply in November

The US Commerce Dept. on Thursday reported that November endured the biggest decrease in retail sales in 11 months after sales had surged in October, likely due to an early holiday shopping season.

Report: US Retail Sales Drop Sharply in November
Image credit: Heidi Fin / Unsplash

Facts

  • The US Commerce Dept. on Thursday reported that November endured the biggest decrease in retail sales in 11 months after sales had surged in October, likely due to an early holiday shopping season.
  • Consumer spending, though, remains supported as unemployment claims fell by the greatest amount in five months last week amid a tight US labor market.
  • Retail spending decreased 0.6% in November, compared to a 1.3% increase in October. With the pace of inflation seemingly slowing down, people spent less on cars, gas, clothes, and big-ticket items, while they spent more on food and beverages.
  • With cars still in short supply, auto sales fell 2.3%. Meanwhile, gas station receipts were down 0.1%, online retail sales fell 0.9%, and clothing stores saw a 0.2% drop in sales.
  • Markets reacted poorly to the news, with the Dow Jones Industrial Average dropping almost 500 points in early trading on Thursday.
  • The Commerce Dept. report was released one day after the Federal Reserve increased its policy rate by half a percentage point. The rate has increased by 425 basis points this year into the 4.25-4.5% range as the Fed tries to fight inflation and avoid a recession.

Sources: Reuters, NPR Online News, Al Jazeera, and CNBC.

Narratives

  • Establishment-critical narrative, as provided by Breitbart. Reports like this are why no one should get overly excited when the administration announces inflation is easing. There are major flaws in the economy as inflation is still high – forcing consumers to spend more on staples and less on luxury items – and fears of a recession loom over every purchase. There’s still a lot of work to do before the administration can boast about having the US economy back on its feet.
  • Pro-establishment narrative, as provided by New York Times. This report has to be taken into greater context. It appears the holiday shopping season actually began in October — as consumers adjusted to earlier retail discounts — meaning the past two months must be considered together. Meanwhile, service and experience industries attracted more spending as people looked to travel and dine out after being confined during the pandemic.