US retail sales excluding autos likely increased again in September, Chicago Fed says

U.S. retail sales excluding motor vehicles and parts posted an estimated 0.5% gain in September, though inflation-adjusted growth was a more modest 0.2%, according to the Chicago Fed. This growth is predominantly driven by higher-income households benefiting from robust wealth gains and solid wage growth, while middle- and lower-income consumers are increasingly squeezed by high prices and labor market sluggishness. Experts anticipate a shift towards more intentional, necessity-driven spending as consumer fatigue with high price levels grows, with official government retail sales data currently delayed.

Analysis

U.S. retail sales, excluding motor vehicles and parts, are estimated to have increased by 0.5% in September, following a 0.7% rise in August, according to the Chicago Fed. However, when adjusted for inflation, the real growth was a more modest 0.2% last month, indicating that price increases continue to significantly influence headline figures. The official comprehensive retail sales report from the Commerce Department remains delayed due to the ongoing government shutdown.

This growth is largely bifurcated, driven predominantly by higher-income households benefiting from robust financial and real estate wealth gains, alongside solid wage growth. Conversely, middle-income consumers are experiencing financial squeeze, while lower-income households face significant challenges from labor market sluggishness and the impact of tariffs on prices. Bank of America Institute data shows September year-over-year spending growth of 2.6% for higher-income households, compared to 1.6% for middle-income and 0.6% for the lowest-income cohort.

The prevailing consumer sentiment reflects fatigue with high price levels, suggesting a shift towards more intentional spending. Experts anticipate households will increasingly prioritize value and necessity over discretionary purchases. This trend implies potential headwinds for non-essential retail sectors, while value-oriented and essential goods providers may demonstrate greater resilience in the near term.

Key Decisions for Investors

• Closely monitor real (inflation-adjusted) retail sales growth and spending trends across income cohorts to gauge underlying consumer strength.
• Re-evaluate exposure to discretionary consumer sectors, favoring companies positioned in necessity-based goods or offering strong value propositions.
• Anticipate potential volatility upon the release of delayed official retail sales data and subsequent consumer confidence reports.