WASHINGTON — The U.S. economy grew at a slower pace last month and early this month, as retailers confronted soft consumer spending and expect only small sales gains for the holiday season, according to the Federal Reserve’s Beige Book.
“Reports on retail spending were downbeat in general,” said the Fed’s anecdotal take on the economy across its 12 districts. “Most districts characterized sales as weak or indicated that they had softened.”
People contacted by the Fed were “slightly pessimistic about prospects for the holiday retail season.”
Consumer electronics, however, continued to make solid gains, and sales picked up in the Boston, Philadelphia, Minneapolis and Kansas City districts. In the Philadelphia district, discount stores drew a sales boost from early markdowns, while some specialty stores faltered. One store executive in the region told the Fed that “consumers have the capacity to spend when they’re motivated.”
Richmond-area retailers, joining stores in other areas of the country, said milder temperatures last month and early this month hurt sales of cold-weather goods. Traffic in stores also slowed in the region.
“Contacts reported that big-box chains operating in the district had already begun to roll out holiday discounts, well ahead of Thanksgiving,” said the report. “A Richmond, Va., merchant said he was surprised to see the national chains ‘break price’ so early.”
Retailers in the Chicago region pinned mixed sales results on household economic worries and higher gasoline prices as well as warmer weather. Dallas stores said higher food costs were sapping buying power from low-income shoppers.
On a more positive note, consumer spending in the Kansas City district rebounded some from September. Sales of apparel and electronics were both relatively strong in the region.