U.S. Retail Sales Exceed Expectations Amidst Consumer Spending Slowdown

U.S. retail sales rose 0.4% in October, surpassing expectations but hinting at a slowdown in consumer spending. The growth has been heavily supported by middle- and upper-income households amidst strong economic indicators. Meanwhile, federal interest rates cuts aim to manage inflation, sparking economic debates.

In October, U.S. retail sales saw a rise of 0.4%, exceeding economist expectations, although consumer spending appears to be losing steam at the fourth quarter's onset. This follows a revised 0.8% increase in September, as reported by the U.S. Commerce Department's Census Bureau last Friday.

Analysts at Reuters anticipated a 0.3% increase, but projections varied between no change and a 0.6% rise. While consumer spending has helped drive economic growth, concerns have been raised about the sustainability of this trend amidst reliance on middle- and upper-income households. However, Bank of America data indicates spending strength across all income levels, though higher-income groups are leading in certain service sectors.

The Federal Reserve recently curtailed its benchmark interest rate by 25 basis points, aiming to manage inflation concerns. Although more rate cuts are anticipated, some economists remain skeptical about further reductions amidst persistent inflation. Fed Chair Jerome Powell signaled no urgency in slashing rates despite previous increases to control inflation pressures.

(With inputs from agencies.)