US Retail Sales Are Proving Resilient While Risks Mount

Labor Market and Economic Conditions - Labor-market conditions showed improvement after a summer low, but the onset of a government shutdown has led to renewed weakness in spending and hiring [1] - Firms are focusing on cost-cutting measures, including technology adoption and reduced hiring [1] - The Federal Reserve is expected to consider a rate cut in December to support the fragile economic recovery [1][7] Retail Sector Performance - Retail companies like Walmart Inc. and Gap Inc. reported strong quarterly sales, particularly appealing to higher-income consumers [3] - Home Depot Inc. indicated that many consumers are delaying remodeling projects and large purchases due to economic uncertainty [3] - Consumer sentiment is at its lowest since 2009, with increased concerns about job security [3][4] Consumer Spending Trends - Discretionary spending is primarily driven by upper-income shoppers benefiting from stock market gains, while lower-income consumers are affected by rising costs of essential items [4] - Retail demand remained resilient over the summer, contributing to economic growth in Q3, but there are concerns that consumer spending may decline as hiring slows [4][5] Upcoming Economic Data - Key US economic data to be released includes the producer price index and durable goods orders for September, along with weekly jobless claims [2] - Economists predict a 0.4% increase in retail sales for September, following a 0.6% gain in August [5]