WASHINGTON (AP) — Consumers stepped up their spending at retail stores last month, providing a boost to the economy in the early phases of the winter holiday shopping season.
Retail sales rose 0.7% in November, the Commerce Department said Tuesday, a solid increase and higher than October's 0.5% gain. Sales jumped 2.6% at auto dealers, driving most of the gain. Some of that demand likely reflected a need for new cars in parts of the southeast slammed by Hurricane Helene in October, as well as healthy incentives provided by car dealers. Big discounts at many retail chains also attracted some consumers.
The boost in spending underscores that the economy is still growing at a healthy pace even with higher interest rates, a trend that could cause the Federal Reserve to lower borrowing costs more slowly next year than they have previously signaled. The Fed will announce its latest rate decision Wednesday.
At the same time, there were some signs of consumer caution, as sales at grocery stores, clothing shops, and restaurants fell. Outside of car dealers and online retailers, sales gains were modest.
“We ultimately expect this will be a decent holiday sales season for retailers,” Tim Quinlan, an economist at Wells Fargo, said in a note to clients. “It’s not going to knock anyone’s socks off in the wake of record pandemic gains, but continued consumer momentum means it’s unlikely to be overly weak either.”
The economy expanded at nearly a 3% annual pace in the July-September quarter and some economists forecast steady growth in the final three months of this year as well. There are some signs of sluggishness in the job market, as hiring has weakened since early this year, but layoffs are also relatively rare and the unemployment rate is at a low 4.2%. Paychecks are growing a solid 4% pace, on average nationwide, which is modestly faster than inflation and helps fuel more spending.
Sales rose modestly at stores selling furniture, electronics, and home and garden supplies. Since the retail sales report isn't adjusted for inflation, some of the increase reflects higher prices. Sporting goods stores reported a 0.9% gain. Sales at online retailers jumped 1.8%.
Spending at restaurants and bars, meanwhile, dropped 0.4%, a sign that consumers did pull back in one discretionary category. Grocery store sales also dipped 0.2%.
On Wednesday, the Fed is expected to cut its key rate for a third time this year, after a big half-point cut in September and a quarter-point last month. But Fed officials, led by Chair Jerome Powell, are also expected to signal that they may reduce their rate only two or three times next year, leaving it far above its pre-pandemic level, when rates on mortgages, auto loans, and credit cards were much slower.
The retail sales report comes as retailers are stepping up deals and other perks to get shoppers into their stores for the crucial final stretch before Christmas.
Analysts envisioned a solid holiday shopping season, though perhaps not as robust as last year’s, with many shoppers under pressure from still-high prices despite the easing of inflation. Overall, retailers had a decent start to the unofficial kickoff to the holiday shopping period despite lots of discounts and sales that started as early as October.
Adobe reported earlier this month that “cyber week” — the five-day period from Thanksgiving to Cyber Monday — brought in $41.1 billion online overall, up 8.2% from the year-ago period. Adobe expects full holiday season sales — Nov. 1 to Dec. 31 — to hit $240.8 billion, up 8.4% compared to a year-ago. And Mastercard SpendingPulse, which tracks in-person and online spending, reported that overall Black Friday sales excluding automotive rose 3.4% from a year ago.
This year, retailers are feeling more pressure since there are five fewer days between Thanksgiving and Christmas. Moreover, the presidential election caused some distraction from shopping, sending sales of general merchandise down 9% in the two weeks ended Nov. 9, according to Circana, a market research group.
Sales have been rebounding but stores will still have to make up for those losses. But there are big shopping days ahead. In the United States, the top 10 busiest shopping days account for about 30% to 40% of all holiday retail traffic, according to Sensormatic Solutions, which tracks foot traffic at retail stores. And six of the top ten busiest days during the holiday season are still ahead, including the day after Christmas, Sensormatic noted.
Spencer Jordan, senior vice president of leasing at Easton Town Center in Columbus, Ohio, said that foot traffic is unchanged from a year ago, but sales are up.
There were steady crowds over the weekend at the Newport Centre Mall in Jersey City, New Jersey, anchored by Macy’s and Kohl’s, with huge discounts being offered at a number of them.
Abraham Ferreyra and his wife purchased two coats Sunday that were on sale for $15 each and said they plan to cut spending on gifts.
“We have a mortgage to pay,” he said. “So we can’t be giving too much.”
This story has been updated to correct that six of the top busiest shopping days during the holiday season are ahead, not five.
FILE - Coffee makers sit on display in a Best Buy store Nov. 21, 2024, in south Denver. (AP Photo/David Zalubowski, File)
Shoppers pass by electric bicycles on display in a Cabela's sporting goods store Sunday, Dec. 8, 2024, in Lone Tree, Colo. (AP Photo/David Zalubowski)
BANGKOK (AP) — Sweeping new tariffs announced Wednesday by U.S. President Donald Trump provoked dismay, threats of countermeasures and calls for further negotiations to make trade rules fairer.
But responses were measured, highlighting a lack of appetite among key trading partners for an outright trade war with the world's biggest economy.
Trump said the import taxes, ranging from 10% to 49%, would do to U.S. trading partners what they have long done to the U.S. He maintains they will draw factories and jobs back to the United States.
“Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen anymore.”
Trump's announcement of a new 20% tariff on the European Union drew a sharp rebuke from European Commission President Ursula von der Leyen, who said it was a “major blow to the world economy.”
“The consequences will be dire for millions of people around the globe,” von der Leyen said. Groceries, transport and medicines will cost more, she said while visiting Uzbekistan, “And this is hurting, in particular, the most vulnerable citizens.”
Von der Leyen acknowledged that the world trading system has “serious deficiencies” and said the EU was ready to negotiate with the U.S. but also was prepared to respond with countermeasures.
British Prime Minister Kier Starmer said the U.K. government would react with “cool and calm heads.”
“Clearly, there will be an economic impact,” he said, telling business leaders in London that he hopes to get the tariffs lifted with a trade deal with Washington.
“Nobody wins in a trade war, that is not in our national interest,” Starmer said.
Japan, America's closest ally in Asia, plans to closely analyze the U.S. tariffs and their impact, Chief Cabinet Secretary Yoshimasa Hayashi said, while refraining from talk of retaliation. But he said the moves would have a big impact on relations with the U.S.
Italy’s conservative Premier Giorgia Meloni said the higher tariffs would benefit neither side.
“We will do everything we can to work towards an agreement with the United States, with the aim of avoiding a trade war that would inevitably weaken the West in favor of other global players,” Meloni said in a Facebook post.
Brazil, hit with a 10% tariff, said it was considering appealing to the World Trade Organization. Its congress unanimously passed a bill to allow retaliation for any tariffs on Brazilian goods.
Financial markets were jolted, with U.S. stock futures down by as much as 3% early Thursday and a 2.8% drop in Tokyo’s benchmark leading losses in Asia. Oil prices sank more than $2 a barrel.
“The magnitude of the rollout — both in scale and speed — wasn’t just aggressive; it was a full-throttle macro disruption,” Stephen Innes of SPI Asset Management said in a commentary.
While the longer-term ramifications could encompass a dismantling of supply chains built up over decades, a more immediate concern is the higher risk of recession.
“The (average) U.S. tariff rate on all imports is now around 22%, from 2.5% in 2024. That rate was last seen around 1910," Olu Sonola, Fitch Ratings’ head of U.S. Economic Research, said in a report.
"This is a game changer, not only for the U.S. economy but for the global economy. Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time,” Sonola said.
The burden falls heaviest on Asia-Pacific nations, with the highest tariffs for impoverished, financially precarious countries like Laos at a 48% tariff, Cambodia at 49% and Myanmar at 44%.
Asian countries that are among the biggest exporters to the U.S. pledged to act fast to support automakers and other businesses likely to be affected.
South Korean Prime Minister Han Duck-soo told officials to work with business groups to analyze the impact of the new 25% tariff to “minimize damage,” the trade ministry said.
China's commerce ministry said Beijing would “resolutely take countermeasures to safeguard its own rights and interests,” without saying exactly what it might do. With earlier rounds of tariffs China reacted by imposing higher duties on U.S. exports of farm products, while limiting exports of minerals used for high-tech industries such as electric vehicles.
“China urges the United States to immediately cancel its unilateral tariff measures and properly resolve differences with its trading partners through equal dialogue,” it said.
Mexican President Claudia Sheinbaum said she would wait to see how Trump’s announcement will affect Mexico, which like Canada was spared for goods already qualified under their free trade agreement with the United States, though previously announced 25% tariffs on auto imports took effect Thursday.
“It’s not a question of if you impose tariffs on me, I’m going to impose tariffs on you,” she said Wednesday morning. “Our interest is in strengthening the Mexican economy.”
Canada had imposed retaliatory tariffs in response to the 25% tariffs that Trump tied to the trafficking of fentanyl. The European Union, in response to the steel and aluminum tariffs, has imposed taxes on 26 billion euros’ worth ($28 billion) of U.S. goods, including bourbon, prompting Trump to threaten a 200% tariff on European alcohol.
Some countries took issue with the White House's calculations.
Australian Prime Minister Anthony Albanese said the tariffs were totally unwarranted, but Australia will not retaliate.
“President Trump referred to reciprocal tariffs. A reciprocal tariff would be zero, not 10%,” said Albanese. The U.S. and Australia have a free trade agreement and the U.S. has a $2-to-$1 trade surplus with Australia. “This is not the act of a friend.”
Trump said the United States bought $3 billion of Australian beef last year, but Australia would not accept U.S. beef imports. Albanese said the ban on raw U.S. beef was for biosecurity reasons.
A 29% tariff imposed on the tiny South Pacific outpost of Norfolk Island came as a shock. The Australian territory has a population of around 2,000 people and the economy revolves around tourism.
“To my knowledge, we do not export anything to the United States,” Norfolk Island Administrator George Plant, the Australian government’s representative on the island, told the AP Thursday. “We don’t charge tariffs on anything. I can’t think of any non-tariff barriers that would be in place either, so we’re scratching our heads here.”
“We don’t have a 20% tariff rate,” said New Zealand's Trade Minister Todd McClay. But he said New Zealand did not intend to retaliate. "That would put up prices on New Zealand consumers and it would be inflationary,” he said.
As Trump read the list of countries that would be targeted, he repeatedly said he didn’t blame them for the trade barriers they imposed to protect their own nations’ businesses. “But we’re doing the same thing right now,” he said.
“In the face of unrelenting economic warfare, the United States can no longer continue with a policy of unilateral economic surrender,” Trump said.
Speaking from a business forum in India, Chilean President Gabriel Boric warned that such measures challenge “principles that govern international trade.”
Colombian President Gustavo Petro, who has clashed with Trump before, said via X that the tariffs marked a milestone: “Today the neoliberalism that proclaimed free-trade policies all over the world has died.”
Analysts say there’s little to be gained from an all-out trade war, for the United States or other countries.
“If Trump really imposes high tariffs, Europe will have to respond, but the paradox is that the EU would be better off doing nothing,” said Matteo Villa, a senior analyst at Italy’s Institute for International Political Studies.
“On the other hand, Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “Probably the hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.”
AP journalists around the world contributed to this story.
People walk past an electronic stock board showing the day's early loss of Japan's Nikkei 225 index at a securities firm Thursday, April 3, 2025 in Tokyo.(AP Photo/Shuji Kajiyama)
U.S. President Donald Trump is seen on a screen as currency traders work at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, April 3, 2025. (AP Photo/Ahn Young-joon)
Containers are stacked at the Port of Los Angeles Wednesday, April 2, 2025, in Los Angeles. (AP Photo/Damian Dovarganes)
Cranes and shipping containers are seen at a port in Pyeongtaek, South Korea, Wednesday, April 2, 2025. (AP Photo/Ahn Young-joon)
Employee Jon Vazquez-DeAnda cuts keys for a customer at employee-owned Devon Hardware, Wednesday, April 2, 2025, in Chicago. (AP Photo/Erin Hooley)
This photo shows vehicles bound for foreign countries at a logistics center in Kawasaki near Tokyo, Thursday, March 27, 2025. (Michi Ono/Kyodo News via AP)
President Donald Trump departs after signing an executive order at an event to announce new tariffs in the Rose Garden of the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Evan Vucci)
President Donald Trump speaks during an event to announce new tariffs in the Rose Garden at the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Mark Schiefelbein)
President Donald Trump speaks during an event to announce new tariffs in the Rose Garden of the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Evan Vucci)
President Donald Trump holds a signed executive order during an event to announce new tariffs in the Rose Garden of the White House, Wednesday, April 2, 2025, in Washington. (AP Photo/Evan Vucci)
President Donald Trump speaks during an event to announce new tariffs in the Rose Garden at the White House, Wednesday, April 2, 2025, in Washington, as Commerce Secretary Howard Lutnick listens. (AP Photo/Mark Schiefelbein)
