Here’s Another Sign That the US Economy Remains Strong

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Still Spending

Americans continue to spend their hard-earned dollars – irrespective of high prices all around them. And that’s good news for the U.S. economy. U.S. retail sales increased by 0.4% in September, according to the Census Bureau. This may sound like a tiny change, but in the world of retail sales data, it was meaningful, not to mention a significant increase from the 0.1% August increase.

Confident Consumers

This is great news for the U.S. economy, which is driven by consumer spending. The Federal Reserve’s high interest rate policy, instituted to combat inflation, was feared to put a real damper on spending and thus economic growth. But this didn’t quite materialize.

And now that the Fed has started to cut rates (the first rate cut happened last month), spending only seems to be accelerating. In September most categories registered gains, including specialty stores, apparel retailers, and restaurants. Notably, the overall figure was weighed down by a decline in gas station sales. Excluding this more volatile category, overall sales grew by 0.6%.

Ups and Downs

The positive data is particularly reassuring, considering not all data points from this week were as promising. U.S. industrial production dropped 0.3% in September, according to Fed data. The decline is attributed in part to extenuating circumstances including the damage from hurricanes Helene and Milton, as well as the ongoing Boeing strike.

Economic data is often a mixed bag, but in this case, the underlying message is positive. With more Fed rate cuts expected in coming months, this momentum could carry the U.S. economy through the holiday spending cycle.

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