Census: Retail Spending Falls Slightly in October

A Census Bureau report released Wednesday suggested consumers saved a few bucks on gas in October and went out to eat. Overall it was a wash.

Census reported overall spending fell 0.1% from September to October after seasonal adjustments, following a 0.9% gain in September. Total spending was an unadjusted $701.5 billion in October, up 2.7% from a year earlier.

NAFCU Chief Economist Curt Long said the 0.1% drop from September to October was the first time growth had slowed for total retail sales since June.

“Federal Reserve officials will be pleased to see a controlled decline in consumption, which is critical for achieving a soft landing,” Long said.

Long said the softening in spending along with Tuesday’s report of a surprising drop in inflation in October indicates the Federal Reserve’s rates have peaked, and the Fed “is now turning its attention toward a rate cut, which should occur in the first half of 2024.”

Unadjusted retail spending — excluding automobiles and parts — was an unadjusted $571.2 billion in October. It rose 2.6% in October from a year earlier, down from a 3% gain in September. The retail gains for September and October were smaller than the 3.2% 12-month gain in the Consumer Price Index for October and the 3.7% gain in September.

Also on Wednesday, PSCU, the St. Petersburg, Fla., payments CUSO, released its monthly Payments Index report, showing spending in September rose 0.4% by credit cards and rose 3.2% by debit cards compared with the year earlier among credit union members using its services. Spending growth was at its slowest pace so far this year, including September’s 12-month rate, when purchases rose 1.4% by credit and 5.6% by debit.

Census and PSCU trends diverged on some categories:

• Gasoline spending fell 7.2% in October from a year earlier, Census reported. PSCU reported spending fell 5% by credit and fell 4% by debit.
• Spending at restaurants and bars rose 7.8% in October from a year earlier, Census reported. PSCU reported spending rose 3% by credit and rose 3% by debit.
• Grocery store spending rose 0.1% in October from a year earlier, Census reported. PSCU reported spending rose 1% by credit and rose 2% by debit.

Total credit card balances handled by PSCU in October rose 9.2% from a year earlier. The average credit card account balance was $3,033 in October, up 7% from a year earlier.

The credit card delinquency rate increased again in October and finished at 2.33%, above the October 2019 pre-pandemic level, by 40 basis points. It rose by 54 bps from October 2022 and 10 bps from September.

“By age demographic, Generation X had the highest year-over-year average increase in the delinquency rate, up 34% to 2.2%. However, Generation Z holds the highest delinquency rate at 4.6% and the lowest year-over-year increase at just 8%,” the report said.

“As expected, boomers have the lowest delinquency rate at 1.4%, but this was up 28% year over year – the same increase for the older millennials, now at 3.4% delinquency. Younger millennials are nearing 4% delinquency (3.9%), up 18% from October 2022,” PSCU said.