US retail sales miss expectations in October

Economists expect moderate retail sales growth for the rest of the year

WASHINGTON - U.S. retail sales increased less than expected in October and could slow further, restrained by spiraling new COVID-19 infections and declining household income as millions of unemployed Americans lose government financial support.

Retail sales rose 0.3% last month, the Commerce Department said on Tuesday. Data for September was revised down to show sales surging 1.6% instead of shooting up 1.9% as previously reported. Economists polled by Reuters had forecast retail sales would gain 0.5% in October.

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Excluding automobiles, gasoline, building materials and food services, retail sales nudged up 0.1% after a downwardly revised 0.9% increase in September. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have risen 1.4% in September.

Daily new coronavirus cases have been exceeding 100,000 since early this month, pushing the number of infections in the United States above 11 million, according to a Reuters tally. Some state and local governments have imposed new restrictions on businesses.

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Restrictions and consumer avoidance of crowded places like bars and restaurants could undercut spending and trigger another wave of layoffs, further squeezing incomes following the loss of a government weekly unemployment subsidy.

The supplement, which was part of more than $3 trillion in government coronavirus relief, has lapsed for millions of unemployed and underemployed workers. Millions more will lose benefits next month when a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs expires.

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Another government program providing benefits for people who have exhausted their six months of eligibility for state aid will also lapse at the end of December.

A second rescue package is unlikely before President-elect Joe Biden takes office in January.

Economists expect moderate retail sales growth for the rest of the year, which will contribute to slower economic growth after a historic rebound in gross domestic product in the third quarter. A JPMorgan survey of credit and debit cardholders showed a broad decline in spending through Nov. 9, with big drops in states where COVID-19 is spreading most rapidly.

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Growth estimates for the fourth quarter are below a 5% annualized rate. The economy grew at a 33.1% rate in the July-September quarter after contracting at 31.4% pace in the second quarter, the deepest since the government started keeping records in 1947.

(Reporting by Lucia Mutikani; Editing by Paul Simao)