Americans’ Downbeat Economic Sentiment Hasn’t Stopped ‘Aggressive’ Spending

Americans are spending through the malaise.

Retail spending, exclusive of restaurant, bar, gas station and car-related bills, grew 0.6% month-over-month in October, reversing a 0.5% decline in September, the National Retail Federation said. The trade group’s monthly analysis comes as consumer sentiment hits historic lows and analysts do their best to assess the economy without data from the now-shuttered federal government. (The Census Bureau’s October retail numbers are due Friday.)

People are maintaining spending, despite feeling less secure—a behavioral quirk that emerged during the pandemic and has persisted since, the NRF said on a conference call last week. Consumers, NRF President Matthew Shay said on the call, “have the ability to do two things at once: They expressed very low sentiment, but yet they drive the economy forward with spending and aggressive participation in commerce.”

Americans give current economic conditions the harshest rating on record, according to a 73-year-old survey conducted by the University of Michigan. Concern is mounting as inflation ticks up, layoffs grow and seasonal hiring is on track for the lowest level in 15 years, the NRF said on a conference call last week.

Some companies remain optimistic about the months ahead. Bark (BARK), which sells food, toys and supplies for dogs, said on a conference call Monday that its advent calendar has already sold out at Costco (COST), according to a transcript provided by AlphaSense. Ralph Lauren (RL) raised its revenue forecast for the full fiscal year when reporting its latest quarterly results last week.

In an era where poor sentiment has little impact on sales, NRF expects retail spending to grow year-over-year this November and December, and surpass $1 trillion this holiday season. The group said many are benefiting from a strong stock market, while those who are struggling may eat out less or make other changes to maintain traditions like exchanging gifts or sharing a big meal.

“If consumers are having to pay more for goods, they’re going to make savings elsewhere,” NRF Chief Economist Mark Mathews said on the call. “We expect them to continue to prioritize spending on loved ones, spending on family.”

Shopify (SHOP) expects revenue to grow in the mid- to high- 20 percent range year-over year in the final quarter, the e-commerce software company said on a conference call last week.

“Consumer confidence for us is measured at checkout,” Shopify President Harley Finkelstein said, according to a transcript, later saying: “Shoppers keep buying. They keep returning and demand remains really resilient.”