UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Consumers versus prices'
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Nov 26, 2025 US retail sales data shows a decline, but it may not be cause for alarm as revisions are likely. Inflation affects nominal sales numbers, complicating real spending insights. An increasing trend towards spending on experiences is noteworthy, as it impacts retail sales metrics. Healthy credit card data suggests consumer confidence persists. The potential government shutdown could hinder economic data flow, amplifying the significance of retail sales leading up to the Federal Reserve meeting.
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Nominal Sales Can Mislead On Real Demand
- Nominal retail sales rising doesn't necessarily mean stronger real spending because inflation raises values without increasing quantity bought.
- Weak nominal sales point to either lower desire to spend or a shift in spending composition rather than reduced purchasing power.
Experience Spending Lowers Goods Sales
- Shifts toward spending on experiences reduce measured retail goods sales even if consumer activity stays strong.
- Credit card data for middle and upper incomes remains healthy, so consumer collapse is not evident.
Use Multiple Indicators Before Judging Retail Data
- Treat single retail sales prints cautiously because they will likely be revised and are affected by limited data availability during the US government shutdown.
- Check complementary indicators like credit card data and upcoming Beige Book reports before drawing policy conclusions.