Auto Sales Drive Unexpected Boost in Consumer Spending in November

A jump in auto sales helped push retail activity higher again in November as consumer spending continued to outpace economists’ expectations.

U.S. retail sales increased 0.7% in November to come in at $724.6 billion, while October’s results were also revised higher, according to Census Bureau data released Tuesday.1 Analysts surveyed by Dow Jones Newswires and The Wall Street Journal expected sales to increase by only 0.5% in the month.2 That made November the sixth consecutive month sales data was better than economists’ projections.

Auto sales were a driving factor behind the strong performance, coming in 2.6% higher than the prior month. Meanwhile, e-commerce sellers posted a 1.8% gain during the month. Grocery stores, clothing outlets and bars and restaurants reported declining sales.

What Does the Retail Sales Data Say About the Future of the Economy?

The strong sales data will likely be a topic of conversation at the Federal Open Market Committee (FOMC) meeting that begins Tuesday. Officials are expected to lower interest rates again, but the retail sales data could add more questions about the Fed’s path ahead in light of the strong economic performance.

“Discussion among policymakers is apt to include the strange combination of a cooling in the jobs market even as consumer spending continues to show solid growth,” wrote Wells Fargo economists Tim Quinlan and Shannon Seery Grein.3

Some economists noted that the strong auto and e-commerce sales data may be overshadowing weakness in other sectors of retail sales.

“The underlying details suggest widening price-conscious shopping behavior as more households end 2024 on a cautious note,” wrote Nationwide Senior Economist Ben Ayers. “This suggests a pullback in economic growth in early 2025 as the momentum for consumer activity is steadily sapped by slowing job growth and still elevated prices.”