Retail sales drop at start of key holiday shopping season

Dec 14, 2022, 3:37 PM | Updated: Dec 15, 2022, 7:17 am
Shoppers carry bags down Fifth Avenue on  Friday, Nov. 25, 2022, in New York. The Commerce Departme...

Shoppers carry bags down Fifth Avenue on Friday, Nov. 25, 2022, in New York. The Commerce Department releases retail sales data for November on Friday, Dec. 15.(AP Photo/Julia Nikhinson, File)

(AP Photo/Julia Nikhinson, File)

WASHINGTON (AP) — Americans cut back sharply on retail spending last month as the holiday shopping season began with high prices and rising interest rates forcing families, particularly lower income households, to make harder decisions about what they buy.

Retail sales fell 0.6% from October to November after a sharp 1.3% rise the previous month, the government said Thursday. Sales fell at furniture, electronics, and home and garden stores.

Americans’ spending has been resilient ever since inflation first spiked almost 18 months ago, but the capacity of Americans to continue spending in a period of high inflation may be beginning to ebb. Inflation has retreated from the four-decade high it reached this summer but remains elevated, enough to erode the spending power of Americans. Prices rose 7.1% in November from a year ago.

“The weakness in sales … suggests that higher borrowing costs, slower employment growth and an unusually low saving rate are now catching up with consumers,” said Andrew Hunter, senior U.S. economist at Capital Economics.

Consumer spending is still likely to grow at a solid pace in the final three months of the year, Hunter said, but he expects a sharp drop early next year.

Monthly sales data can be volatile and one negative report is often followed by a rebound, other economists said.

Sales plunged 2.3% at auto dealers, and slipped 0.6% at sporting goods stores and 0.1% at general merchandise stores, a category that includes large chains such as Walmart and Target. Sales at online and catalog stores fell 0.9%.

The steep 2.5% decline in sales at home and garden stores likely reflects the sharp decline in home sales due rapid interest rate hikes in the U.S., which have put homes increasingly out of reach for more Americans.

Solid hiring, rising pay, and enhanced savings from government financial support during the pandemic have enabled most Americans to keep up with rising prices. Yet many are now digging into their savings to maintain the same level of spending. The saving rate declined to its second-lowest level on record in October.

Americans are also putting more purchases on their credit cards. Total credit card debt jumped 15% in the July-September quarter, according to the Federal Reserve Bank of New York, the biggest jump in 20 years.

Shopping at a Walmart in New Jersey, Eric Cruz, said he planned to cut his holiday shopping budget by roughly 20% this year, to about $800. The 33-year-old Jersey City entrepreneur said rising costs for utilities and rent now take a bigger chunk of his income. He is trying to offset rising costs by seeking out credit cards with greater rewards, like 5% back on spending.

“I am looking for extra incentives and credit cards allow me to do that,” he said.

Symptoms of economic stress are beginning to appear, retailers have noted.

Craft supplies chain Jo-Ann Stores this week announced a pause in quarterly dividends for investors after comparable store sales fell 8% during its most recent quarter, which ended in October.

“Budget-conscious consumers have been under a prolonged period of stress for many months now, and they are getting more selective,” said CEO Wade Miquelon.

Miquelon said, however, that inflation is subsiding even as the U.S. potentially heads into “something more typical of a recessionary environment in the short term.”

Overstock, the online retailer that sells a lot of furniture, began promoting holiday items as early as October this year to pull in cautious shoppers, said CEO Jonathan Johnson.

“Everyone is competing for wallet share by offering the best deals they can offer,” Johnson said. “Customers continue to look to stretch their dollars as far as possible.”

Black Friday weekend, which kicks off the holiday shopping season, was strong this year, said Sonia Lapinsky, managing director in the retail practice at consultancy AlixPartners.

Yet, Lapinsky noted, people are buying less overall with almost everything more expensive than it was last year.

“Inflation is going to continue to put pressure on the wallet,” Lapinsky said. “I think consumers are going to hunker down.”


D’Innocenzio reported from New York.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Associated Press

Indian police nab over 2,000 men for illegal child marriages

GUWAHATI, India (AP) — Indian police have arrested more than 2,000 men in a crackdown on illegal child marriages involving girls under the age of 18 in a northeastern state, officials said Saturday. Those arrested this week included more than 50 Hindu priests and Muslim clerics for allegedly performing marriages for underage girls in Assam, […]
1 day ago
FILE - The Starbucks logo is seen on a storefront, Friday, Oct. 14, 2022, in Boston Starbucks repor...
Associated Press

Starbucks misses sales, revenue estimates as China falters

Starbucks reported lower-than-expected sales in its fiscal first quarter, with COVID store shutdowns in China overshadowing stronger results elsewhere.
1 day ago
Indonesian Foreign Minister Retno Marsudi speaks during a news conference of the Association of Sou...
Associated Press

ASEAN vows to conclude pact with China on disputed territory

JAKARTA, Indonesia (AP) — Southeast Asian foreign ministers vowed to finalize negotiations with China over a proposed pact aimed at preventing conflicts in the disputed South China Sea in their annual retreat on Saturday in Indonesia’s capital. In the final session of their two-day meeting, the ministers from the Association of Southeast Asian Nations also […]
1 day ago
A girl looks at a photo of the famed mountain lion known as P-22 as the exhibit wall is covered wit...
Associated Press

Famed LA mountain lion’s death shines light on tribal talks

LOS ANGELES (AP) — The life of Los Angeles’ most famous mountain lion followed a path known only to the biggest of Hollywood stars: Discovered on-camera in 2012, the cougar adopted a stage name and enjoyed a decade of celebrity status before his tragic death late last year. The popular puma gained fame as P-22 […]
1 day ago
FILE - A ferry berths as a partially illuminated Colombo Lotus Tower, a multi complex digital trans...
Associated Press

Sri Lanka marks independence anniversary amid economic woes

COLOMBO, Sri Lanka (AP) — Sri Lanka marked its 75th independence anniversary on Saturday as a bankrupt nation, with many citizens angry, anxious and in no mood to celebrate. Many Buddhists and Christian clergy had announced a boycott of the celebration in the capital, while activists and others expressed anger at what they see as […]
1 day ago
Associated Press

Friday’s Scores

BOYS PREP BASKETBALL= Almira/Coulee-Hartline 51, Selkirk 31 Annie Wright 71, Bellevue Christian 45 Chiawana 84, Hanford 44 Cle Elum/Roslyn 78, Kittitas 25 Clover Park 75, Washington 53 Crescent 44, Clallam Bay 34 Crosspoint Academy 64, Rainier Christian 24 Davis 65, Sunnyside 63 DeSales 81, Sunnyside Christian 67 Decatur 73, Highline 50 Eastside Prep 59, University […]
1 day ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Retail sales drop at start of key holiday shopping season