Retail Sales Unexpectedly Rose in September

Retail sales in the United States unexpectedly rose by 0.7% in September, possibly because of inflation, as well as more expensive motor vehicles being purchased at auto dealerships. While this increase is normally good, economists are wary that the inflation experienced during September is the reason as to why sales rose, and many continue to hold the opinion that the third quarter experienced a slow down in consumer demand. 

Because of inflation, higher prices of items and goods resulted in boosting receipts — which then increases the overall retail sales of the month. Economists remain wary that the upcoming holiday season may be hampered by global supply chain bottlenecks that may keep many stores with a low stock of highly desired items. 

This latest data shows a mix of consumers still having a high demand for goods, while also dealing with increased prices. While consumer demand is still high, it is nowhere near the surge experienced earlier in 2021. Many economists are wary that consumer demand may continue to slow down, thereby causing the economy to slow down. If prices of goods continue to escalate, we may quickly see consumer demand slow. 

The holiday season could go many ways, according to economists. Many are forecasting that global supply chain bottlenecks and problems could keep many businesses — both small and large corporations — from having the level of business they should do during the busiest time of the year. While many steps have been taken by the government and businesses to try to ensure that these port clogs and supply chain problems are taken care of by the time the holiday season officially begins, nobody truly knows what will happen.

Material shortages also continue to impact businesses, especially the auto industry. Chip shortages have kept automakers from fully producing the number of cars necessary. This, in turn, has also caused the price of cars to surge — and has kept many from buying new cars because of this higher price tag. These shortages could continue to hinder consumer demand in the auto industry, as a result. 

Labor shortages have also impacted business activity around the nation — and thereby impacted the economy. For example, one of the main reasons why the ports are so clogged is because these ports are suffering from massive labor shortages. Therefore, this labor shortage may also hinder the number of goods that will be available to purchase on store shelves this season.

Other areas of the supply chain may also impact retail sales in the coming months, as labor shortages have also hit companies looking for warehouse workers and truck drivers. If there are fewer goods on shelves this holiday season — everything from food to toys could be affected — then this will possibly slow down business activity and retail sales for the upcoming months.

Even if goods are priced higher, as they have been, consumer demand could still slow. Lack of items available to buy during the busiest season of the year could also cause upcoming retail sales to slow.