September Retail Sales Edge Up Ahead of Holidays/ Newslooks/ WASHINGTON/ J. Mansour/ morning Edition/ U.S. retail and restaurant sales ticked up 0.2% in September, extending months of consumer-driven growth. The increase reflects ongoing consumer resilience despite inflation and rising unemployment. Economists expect solid Q3 growth, with holiday spending under close watch.
September Retail Sales Growth Quick Looks
- Retail sales rose 0.2% in September, extending months of strong consumer activity
- Report delayed due to government shutdown, other key data still pending
- Consumer spending drives economic momentum, even amid inflation and job concerns
- Unemployment edged up to 4.4%, highest since 2021
- Higher-income households fueling most retail gains
- Lower-income consumers more cautious, focused on necessities
- Holiday season expected to top $1 trillion in sales, a new record
- Economists forecast 3%+ GDP growth in Q3
September Retail Sales Edge Up Ahead of Holidays
Deep Look
WASHINGTON (AP) — U.S. retail and restaurant sales rose modestly in September, increasing 0.2% from the previous month, signaling that American consumers remain resilient even as economic headwinds mount. The data, released Tuesday by the Commerce Department, was delayed over a month due to the recent government shutdown, which has also held back a slew of other key economic indicators.
Despite high prices for groceries, housing, and imported goods impacted by tariffs, Americans are still spending, particularly on dining and discretionary items. The September increase builds on a trend of strong summer spending, though it marks a cooling from prior robust gains. Analysts interpret the moderation as a sign of healthy, sustainable growth rather than a downturn.
The spending uptick is critical as consumer demand accounts for roughly two-thirds of U.S. economic activity. As a result, many economists now expect the U.S. economy to expand at an annualized rate of 3% or higher in the third quarter, a significant acceleration from the 1.6% growth recorded in the first half of 2025.
However, the outlook is not without caution. The labor market has shown signs of softening. Unemployment rose slightly to 4.4% in September, its highest level in nearly four years, according to a separate jobs report that was also delayed. Job growth has been weaker than expected, raising concerns that reduced income stability could curb consumer spending in the months ahead.
Income disparity is playing a notable role in spending trends. Retail data from Bank of America and retail giants such as Walmart indicate that higher-income shoppers are driving most of the gains, continuing to spend on goods and services. In contrast, lower-income households are prioritizing essentials, cutting back on non-necessities, and seeking more discounts and deals.
This nuanced spending landscape sets the stage for the critical winter holiday season, which officially begins this weekend with Black Friday and Cyber Monday. Retailers typically earn up to 20% of their annual revenue during the holidays, making consumer sentiment and behavior during this period crucial to overall economic performance.
The National Retail Federation (NRF) anticipates modest gains for the 2025 holiday season. But even conservative growth projections would still result in a historic milestone: the NRF forecasts that total holiday sales will exceed $1 trillion for the first time ever.
This optimism is bolstered by strong back-to-school shopping in late summer and increased travel spending, despite elevated interest rates and inflation. However, continued economic strain, such as a weakening labor market or a decline in consumer confidence, could quickly temper that momentum.
The broader economic picture remains somewhat opaque due to ongoing delays in key federal economic reports, including updates on inflation, GDP, and industrial production. The government expects to be caught up by late December, according to administration officials.
In the meantime, the retail sales report provides one of the clearest signals of current consumer behavior—and it’s largely positive. As long as spending holds, the U.S. economy may be able to withstand inflation and employment turbulence, at least in the near term.
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