U.S. retail sales growth moderates in third quarter as energy costs raise spending risks

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US retail sales growth slows

Highlights

U.S. nominal retail sales rose at a 4.84% annualized rate in Q3 2024, down from a 5.27% increase in the same 2025 period, reflecting slower momentum.
Gasoline station spending jumped 6.6% quarter on quarter in Q3 amid escalating Middle East conflict, raising risks for discretionary consumer sectors.
The personal savings rate dropped to 4.09% in September, its lowest since November 2022, increasing headwinds for consumer spending, investment, and potentially sustaining tighter Fed policy.

Third-quarter sales trends and inflation-adjusted demand

As reported by HR Ratings, the three-month moving average of nominal retail sales increases at an annualized 4.84% quarter on quarter in the quarter ending in September, slightly below the 5.27% rise recorded in the same period of 2025.

Consumer demand still shows support from solid economic growth and a steady labor market. After adjusting for third-quarter annualized consumer inflation of 1.73%, real retail sales expand by about 3.0%, broadly in line with the 3.6% gain in real consumer spending forecast by the Atlanta Federal Reserve's GDPNow model.

The moderation from 2025 appears across major categories. Sales excluding food services rise 4.0% quarter on quarter, down from 5.8% a year earlier, while total sales excluding food, gasoline, and motor vehicles and parts, one of the more stable measures, increase 4.96% compared with 5.93% in the quarter ending in September 2025.

Energy prices and savings pressure outlook

HR Ratings says significant risks could lead to a continued slowdown in household spending, with elevated inflation in the U.S. economy remaining a central concern. Escalating energy costs linked to the Middle East war are changing consumer behavior and making broader judgments about real consumer spending growth more difficult.

This shift is visible in a 6.6% quarter-on-quarter jump in gasoline station spending during the third quarter. If the situation in the Middle East continues, HR Ratings projects that a larger share of consumer spending will stay allocated to fuel, with possible effects on other sectors of the economy.

The monthly personal savings rate, at 4.09% month on month, reaches its lowest level since November 2022, when it stood at 3.98%. HR Ratings says that if lower savings and higher gasoline spending persist, investment in data centers and artificial intelligence could face challenges, while the Federal Reserve is expected to stay focused on persistently high inflation, pointing to a potentially tighter policy stance.

In our earlier article on the conflict-driven spike in oil shipping costs, we explained how disruptions on major tanker routes were pushing freight and insurance rates sharply higher and becoming a much larger component of crude pricing. We also noted that these higher transport costs can flow through to gasoline and broader consumer prices, adding inflation pressure for import-dependent markets and households.

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