Retail sales unchanged in October hurt in part by a decline in auto
sales
[December 17, 2025] By
ANNE D'INNOCENZIO
NEW YORK (AP) — Sales at U.S. retailers and restaurants were unchanged
in October from September as consumers moderated their spending amid
worries about higher prices and other economic uncertainties after
splurging over the summer.
But a big factor dragging down the figure was a 1.6% drop in sales at
motor vehicles and auto parts dealerships, hurt by the expiration of
federal government subsidies that sliced demand for battery-powered
electric cars. Excluding that category, retail sales rose 0.4%, the
Commerce Department said Tuesday in a report delayed more than a month
because of the 43-day government shutdown.
The overall flat spending in October was less than economists expected
and followed a revised 0.1% increase in September, the agency said.
Retail sales jumped 0.6% in July and August and 1% in June.
The federal government is gradually catching up on economic reports that
were postponed by the shutdown.
“The retail sales report for October was a dud, but the underlying
details offer more encouraging signals for (fourth quarter) consumer
spending and an elevated starting point for the critical two-month
stretch for holiday sales,” Tim Quinlan, an economist at Wells Fargo,
wrote Tuesday.
Still, Quinlan said other data suggest some slowdown through
mid-December and leave the firm cautious on how the consumer crosses the
finish line.
The government retail sales figures, which aren’t adjusted for
inflation, show that Americans remained selective in October as many
households struggled with high prices for groceries, rent, and many
imported goods hit by tariffs.
The latest job report, released by the Labor Department Tuesday, also
shows a souring employment picture.
The retail sales report covers about one-third of consumer spending,
with the rest going to services such as travel, haircuts, and
entertainment.
Sales at clothing and accessories stores rose 0.9%, while business at
furniture and home furnishing stores increased 2.3%, likely due to
rising prices because of tariff costs. Most furniture is made in China.
Online retailers posted a 1.8% sales increase, while department stores
saw business rise 4.9%.
But business at restaurants, the lone services component within the
Census Bureau report and a barometer of discretionary spending, posted a
0.4% sales dip.
The report comes as retailers are preparing for the crowds of
last-minute shoppers with expanded hours and stepped up deals for the
last stretch of holiday shopping before Dec. 25.
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 Hiring has generally been weak,
while the unemployment rate has ticked higher, which could hurt
consumer spending and the broader economy. The latest job report
showed that the U.S. gained a decent 64,000 jobs in November but
lost 105,000 in October as federal workers departed after cutbacks
by the Trump administration.
The unemployment rate rose to 4.6%, the highest since 2021.
Despite lots of uncertainty, holiday shopping season had a solid
start, with shoppers focusing on deals, according to data over the
Black Friday weekend. But spending hasn't been even across the
board.
Third-quarter results from retailers released last month have been
mixed. Walmart, the nation's largest retailer, posted strong sales
as it pulls shoppers across a wide spectrum of incomes who are drawn
to its low prices. TJX Cos., which operates stores under such names
as T.J. Maxx and Marshalls, has seen an influx of shoppers looking
for a treasure hunt experience.
But Home Depot has seen slower spending as shoppers focus on small
home projects, while Target, grappling with weak sales, is trying to
revive its reputation as a place for affordable but stylish fashion
and home goods.
The National Retail Federation, the nation’s largest trade group,
still expects sales over November and December to increase 3.7% to
4.2%, compared with last year.
Retailers rung up $976 billion in holiday sales last year, or a 4.3%
increase from the prior year, the group said.
But spending trends by income continue to show a K-shaped pattern,
with higher-income Americans thriving with their salaries and wealth
rising, while the bottom part points to lower-income households
struggling with weaker income gains and steep prices.
Based on spending from its credit card and bank customers, Bank of
America Institute found that high-income shoppers increased spending
by 2.6% in November compared with the year-ago period, while
lower-income groups lagged behind with a gain of just 0.6% compared
with a year ago.
“Near-full employment has continued to support broad-based consumer
demand,” Moody's Rating's Claire Li, vice president of credit
strategy, wrote in a report published earlier this month. “But
slowing hiring, cooling wage gains, and mounting affordability
pressures are eroding households’ consumption growth.”
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