Economy Watch: Beige Book Reports Modest Retail Spending Increases

Increases in retail sales were supported by personal income rising 0.4 percent in October, according to a recent Bureau of Economic Analysis report.

shopping-562616_1920U.S. economic activity continued to increase at a “modest to moderate” pace in October and mid-November, according to anecdotal reports from the 12 Federal Reserve districts and compiled in the Beige Book by the Federal Reserve, which was released Nov. 30.

Pre-holiday reports of consumer spending on retail and autos were mixed but largely flat. Still, the outlook for holiday sales was generally optimistic.

Increases in retail sales mostly came from new store openings or new business ventures, the Fed reported, as year-over-year comp-store sales were characterized by low single-digit decreases or growth of less than 1 percent. A handful of retailers said that weather conditions, both the hurricanes in the Southeastern U.S. and warmer-than-usual fall weather in the Northeast, contributed to these modest comp-store results.

Higher incomes

Whether consumers are going to stores or not, however, they do have a bit more money to spend now. The Bureau of Economic Analysis also recently reported that personal income increased $65.1 billion (0.4 percent) in October compared with the previous month. Disposable personal income increased $66.1 billion (0.5 percent) and personal consumption expenditures increased $34.4 billion (0.3 percent).

People increased their spending on both for goods and services, the BEA said. Within goods, the category “other nondurable goods,” which includes prescription drugs and recreational items, was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for “other services,” which includes passenger fares for foreign travel and communication services.