Consumer spending is increasing ahead of the holiday season, according to federal data.
The Wall Street Journal reported:
Household spending rose 1.3% in October from a month earlier, while personal income increased 0.5% last month, the Commerce Department said Wednesday. Consumers are benefiting from a strong labor market. And they are spending at a faster pace than inflation, which recently hit a three-decade high.
Jobless claims, a proxy for layoffs, fell to 199,000 last week, the lowest weekly level in 52 years, the Labor Department separately said. The sharp decline in unemployment claims suggests rising wages and bountiful job openings could continue to buttress consumer spending — the economy’s main engine — despite fading government stimulus and dwindling savings.
An earlier report from the United States Census Bureau reveals that American retail and food services sales rose by 1.7% between September and October — signaling that consumers are willing to absorb inflation as the economy continues to recover. Indeed, some firms have been able to pass inflation on to consumers by hiking their prices.
Tyson Foods, for example, saw improved margins in their most recent quarter after increasing the costs of beef, poultry, and other meat products.
“I can’t think of a single thing that has either stayed the same or gone down,” said Tyson chief executive Donnie King, in reference to rising input costs.
“The inflation we incur needs to be passed on,” added chief financial officer Stewart Glendinning. “Some of the inflation for us has been substantial.”
General Mills — the company behind food brands such as Annie’s, Progresso, Yoplait, Fruit Roll-Ups, Betty Crocker, Pillsbury, Cheerios, Cinnamon Toast Crunch, Lucky Charm’s, Wheaties, Reese’s Puffs, and Trix — will increase prices by 20% for many items. CNN Business reported that the company plans to push inflation-related costs to its grocery and convenience store customers.
After 35 years of consistent pricing, Dollar Tree announced that it would increase nationwide price points to $1.25 — a move that 91% of consumers are expected to accept.
“We experienced a strong finish to the quarter, as shoppers are increasingly focused on value in this inflationary environment,” said Dollar Tree chief executive Michael Witynski. “Our Dollar Tree pricing tests have demonstrated broad consumer acceptance of the new price point and excitement about the additional offerings and extreme value we will be able to provide. Accordingly, we have begun rolling out the $1.25 price point at all Dollar Tree stores nationwide.”
Meanwhile, a new poll shows that 77% of Americans say inflation is impacting their lives; 57% blamed President Biden. A majority of Americans are worried they “won’t be able to afford what they need during the holidays due to inflation,” while 45% are worried they “won’t be able to get what they need” due to shortages.
Another poll indicates that 96% of Americans do not believe things are going “very well” in America. President Biden was denounced by 67% of respondents for his handling of inflation.