Key Takeaways
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- September US retail sales are expected to rise 0.4%, signaling continued—though moderating—consumer resilience.
- Spending strength is increasingly concentrated among higher-income households benefiting from market gains.
- Consumer sentiment is deteriorating, with the weakest personal-finance outlook since 2009 and rising job-loss fears.
- Key US data this week includes PPI, durable goods, jobless claims, the Fed’s Beige Book, and Canada’s Q3 GDP.
What Happened?
US retail sales are projected to have grown 0.4% in September following a 0.6% increase in August, according to economists surveyed by Bloomberg. The numbers—delayed by the government shutdown—cap an otherwise strong quarter for consumer spending driven primarily by upper-income households. Major retailers like Walmart and Gap reported robust results and success attracting wealthier shoppers, while companies such as Home Depot noted softness in discretionary big-ticket spending. Broader consumer sentiment has deteriorated sharply: University of Michigan data shows the weakest personal-finance outlook since 2009 and job-loss expectations at a five-year high.
Why It Matters?
The data shows a bifurcated consumer landscape. High-income shoppers, boosted by stock-market gains, are driving retail strength, while lower-income households remain strained by elevated prices for essentials. This uneven demand profile raises questions about durability as hiring slows and employers cut costs. With retail making up a major component of GDP, any cooling could weigh on the broader recovery. The timing is also important: markets are heading into Thanksgiving and Black Friday, traditionally critical demand periods. Meanwhile, analysts at Bloomberg Economics argue that the Fed may need to cut rates in December to sustain the “fragile recovery” that began over the summer.
What’s Next?
Investors will focus on a series of high-impact releases this week—including September PPI, durable goods orders, and jobless claims—which could shape expectations for the Fed’s December meeting. The Beige Book is likely to show early signs of weakening activity and softer labor markets. In Canada, a sluggish Q3 GDP print is expected, reflecting tariff-driven export weakness. Globally, inflation readings from Australia, Germany, Mexico and others, along with central-bank decisions in New Zealand, Israel, and Nigeria, will frame the macro tone. With consumer sentiment slipping and hiring softening, upcoming data will be critical in determining whether the US consumer can continue to prop up economic momentum into year-end.
