Consumers Hit the Stores as Inflation Steps Aside
With inflation no longer calling the shots, shoppers are dusting off their wallets — just in time to splurge for the holidays. According to last Friday’s report, retail sales grew 0.4% in October, surpassing estimates of 0.3%. This growth was driven by a 1.6% rise at auto dealers and a 2.3% increase in electronics and appliance stores. This momentum is spilling into the consumer discretionary sector, signaling that spending is still going strong.
- Over the past month, the Consumer Discretionary Select Sector SPDR Fund has climbed ~9%, making it the top-performing industry — with companies like Lululemon rallying nearly 40% since August.
- Meanwhile, filings last week revealed that Warren Buffett’s Berkshire Hathaway has taken a $550M stake in two underperforming consumer discretionary stocks: Domino’s Pizza and Pool Corp.
What’s driving this spending? Lower prices. According to Mastercard’s Chief Economist Michelle Meyer, “Since the pandemic, this is the first holiday season where a lot of the holiday categories are seeing price declines year-over-year.” That’s good news for shoppers — and it could give spending a further lift as we move into 2025.
