U.S. gross domestic product grew better than expected in the third quarter, although it was slightly lower than the 2% growth registered in the second quarter. The Commerce Department on Wednesday announced that the country's economy grew 1.9%, compared with expectations of 1.6% in the third quarter.
The better-than-expected growth was a result of continued consumer spending. Personal consumption expenditure, a gauge of spending by U.S. households, grew at an annualized rate of 2.9%. This is clear indication that an increasing number of Americans are spending more on household goods amid concerns of a slowing economy.
The latest data is certainly going to lift the sentiments of retails, who are gearing up for the all-important holiday season. Consumption accounts for more than two-thirds of economic activity, which continued to grow in the third quarter. The third-quarter is expected to give personal consumption expenditure a boost given that the approaching holiday season is likely to witness a rise in retail sales.
On Tuesday, per Adobe Analytics' annual calculations, online shopping in the U.S. is expected to reach $143.7 billion in November and December, a rise of 14% compared with last year's holiday season spending, which registered sales of $126 billion.
The holiday season is one of the most important periods for retailers in the U.S. The last few years has seen robust grown in sales during the holiday season. Holiday sales are expected to set a record this year, which has also given a boost to the confidence of retailers.
All major retailers including Amazon, Walmart, Kroger, Target Corporation, EBay, Best Buy have already started coming up with lucrative deals. Moreover, most retailers are planning to start their deals early this time given that this year will witness a shortened holiday season, with only 22 days between Cyber Monday and Christmas. This has also seen a number of retailers going on a hiring spree to meet the delivery demands during the holiday season.
Retailers in the U.S. have been reeling under pressure for quite some time now, owing to President Donald Trump's tariffs. However, earlier this month, the National Retail Federation had forecast U.S. holiday retail sales to reach $730 billion, growing 3.8% and 4.2% annually. Although U.S. retail sales dropped 0.3% in September, the first time since February, retailers are banking heavily on the holiday season.