Analysis: The highly watched U.S. September retail sales month-on-month rate fell short of expectations.

On November 25, U.S. retail sales growth for September fell short of expectations, taking a breather after a series of strong increases in recent months. Data released on Tuesday showed that retail sales rose by 0.2% month-on-month, compared to an unrevised increase of 0.6% in August. Economists surveyed had previously forecast a 0.4% increase in retail sales for the month. Sales had accelerated in previous months, partly due to consumers rushing to purchase electric vehicles before the tax credits expired at the end of September. The slowdown in sales is unlikely to change economists' expectations for a rebound in consumer spending in the third quarter. Retail sales excluding automobiles, gasoline, building materials, and food services fell by 0.1% in September, while August's retail sales were revised down to a growth of 0.6%. These so-called core retail sales align most closely with the consumer spending component of GDP. However, current consumption is primarily driven by high-income households, while many low- and middle-income consumers are bearing the pressure of rising costs—partly stemming from import tariffs—creating what economists refer to as a K-shaped economy. ( Jin10 )