Retail sales up solidly in October as Americans showed continued willingness to spend

AP SETS THE STANDARD FOR POLITICAL REPORTING. SUPPORT INDEPENDENT, FACT-BASED JOURNALISM. Business Retail sales up solidly in October as Americans showed continued willingness to spend By CHRISTOPHER RUGABER and ANNE D’INNOCENZIO Updated 3:17 PM MST, November 15, 2024 WASHINGTON (AP) — Americans stepped up their spending at retailers last month in the latest sign that healthy consumer spending is driving the economy’s steady growth. Retail sales rose 0.4% from September to October, the Commerce Department said Friday, a solid increase though less than the previous month’s robust 0.8% gain. A 1.6% jump in sales at auto dealers drove much of the gain. Purchases climbed 2.3% at electronics and appliances stores and 0.7% at restaurants and bars. Though some of October’s rise in retail sales reflected higher prices, it mainly indicated increased purchases. Sales in some categories fell — furniture stores, clothing outlets and drug stores, among them — though economists said that weakness likely resulted, at least in part, from last month’s hurricanes. Sales at home and garden stores rose, potentially reflecting rebuilding activity after the storms. “The moderation in the pace of price growth is allowing consumers to ratchet up spending,” said Tim Quinlan, an economist at Wells Fargo. “People may not love how much it costs to go out to eat, but their bar and restaurant spending is growing faster than prices are.” The latest retail sales figures suggest that the economy is growing briskly again in the current October-December quarter, after having expanded at a sturdy 2.8% annual rate in the previous quarter. Since peaking at 9.1% more than two years ago, inflation has sunk to 2.6%, not far above pre-pandemic levels. And Americans’ take-home pay, on average, has surpassed inflation for about 18 months. Still, the post-pandemic inflation spike has left prices about 20% higher than they were three years ago and dimmed Americans’ outlook on the economy. That was a key reason why Donald Trump was able to capitalize on public discontent with the Biden-Harris administration and recapture the White House in last week’s election. Despite high price levels, though, Trump inherits an economy in which spending is strong, growth is solid and unemployment low. Other recent economic reports have also pointed to a healthy economy. In a sign that households, whose purchases drive most of the economy, will continue spending, the Conference Board’s most recent consumer confidence index posted its biggest monthly gain since 2021. The proportion of consumers who expect a recession in the next 12 months dropped to its lowest point since the board first posed that question in 2022. One cautionary note is that grocery-store sales barely rose last month, a sign that many Americans may still be struggling to adapt to food prices that are still much higher than they were three years ago. Lorraine Thompson, who was food shopping this week at a Walmart in Secaucus, New Jersey, said she’s not noticing any slowdown in inflation. “Everything is high,” she said. “The meat, the cheese.” Thompson said she’s been buying less cheese and has been food shopping more at Walmart because she thinks the prices there are lower than at other supermarkets. The National Retail Federation has predicted that shoppers will increase their spending in November and December by between 2.5% and 3.5% over the same period a year ago. During the 2023 holiday shopping season, spending had surged by a stronger 3.9% from 2022. Some retailers say they expect consumers to spend more freely in the coming months. Affirm, a buy-now, pay-later company that has been expanding as more consumers seek online installment loans, last week reported that growth in its active consumers accelerated for a third straight quarter to nearly 20 million. “Everything we see suggests the consumer feels like they want to be out spending,” Michael Linford, Affirm’s chief operating officer, told The Associated Press. Analysts will be dissecting quarterly results next week from Walmart and Target, among others, to gauge how shoppers are navigating still-high prices and to assess their mood after a presidential race that pivoted in large part on voters’ discontent with the economy. One of the first major retailers to report fiscal third quarter earnings was Home Depot, which continues to grapple with a pullback in spending from customers. But the retrenchment was less severe than in the past, and its performance beat Wall Street’s expectations. Home Depot’s CEO Edward Decker said that Trump’s proposed high tariffs on imports, if implemented, would intensify pressure on the company. But he added that Home Depot sources well more than half its goods domestically and elsewhere in North America.

Commentary Political Ad Local TV For Q3 And Beyond: Big Gains Or Something Else?

 

Commentary

Political Ad Local TV For Q3 And Beyond: Big Gains Or Something Else?

• by Wayne Friedman , Staff Writer, November 11, 2024

Although political advertising so far for local TV stations has come in mostly as expected, there are concerns -- especially in tandem with where core (non political) advertising has been for major operators.

Looking at a couple of the biggest TV stations owners might offer some perspective.

Nexstar Media Group, the biggest owner of U.S. local TV stations, soared 16% in the third quarter to $154 million in political advertising one the same period in 2020 -- with the company growing 22% in overall ad revenue to $622 million.

For that $154 million, the company lost $22 million year-over-year in core TV advertising due to market softness as well as “political displacement.”

FCC rules mandate that TV stations must run political advertisers' campaigns that can push out core, non-political marketers.

For its part, Sinclair, the second-biggest U.S. owner of TV stations, rose 42% to $433 million in overall ad revenue, with $140 million coming from political advertising.

Although political advertising can mess up its regular seasonal advertiser media scheduling, Sinclair said core advertising inched up 1%.

For the fourth quarter, Sinclair says core advertising will be down mid-single digits. But that’s not too bad, says Daniel Kurnos, media analyst at Benchmark. “Political numbers like this would normally produce anywhere from 6% to 15% declines per quarter in core revenue due to crowd-out.”

He adds that Sinclair can do this because it has a “new algorithmic yield management strategy" that "is still working.”

All this suggests that local TV stations still believe that political advertising will continue on this pace -- if not increase -- in future years. Are hungry local and regional market political groups -- and the expected big Presidential media years (as well as midterms election years) -- still trending higher?

Some political advertising shadows may be lurking around.

The broader picture may suggest a cloudier side to political advertising, especially when looking at Nexstar -- which for the year so far in 2024 through Election Day, pulled in $491 million.

The problem is that this was a big $100 million below consensus, says Kurnos.

Sinclair came in at $406 million for the year, down around $30 million, an expected $440 million.

And perhaps the concerns are not just for Nexstar and Sinclair, but for all media platforms looking to make hay with political.

“It feels like total political may come in below lofty expectations across every medium this campaign cycle, with last minute cancellations or dollar shifts particularly damaging to broadcasters who typically require longer lead times to fill inventory," Kurnos adds.

Core advertisers have already been an issue with local TV stations, and adding in political messaging uncertainty is not good news.

 

Will Skydance Transform Paramount, CBS Into A 'Modern' Media Company?

• by Wayne Friedman , Staff Writer, Yesterday

Could CBS make a dramatic move now with Jeff Shell at the helm as president of Paramount Global -- in cutting back on programming in certain time periods?

For years, TV network executives floated the idea of cutting back on programming/production costs.

That in turn has meant reducing the time periods -- especially in prime time -- where it generates major value from advertisers.

In 2022, Jeff Shell, then CEO of NBCUniversal, mulled the idea of giving back the 10 p.m. hour to network affiliates.

Ultimately -- for a number of reasons -- NBCU did not make the move. Hollywood producers, agents, and talent resisted this approach.

In addition, NBC had a long-time major relationship with “Law & Order” producer Dick Wolf, as the network where much of his programming airs.

Much of the 10 p.m. time period continues to be filled with crime/procedural dramas for networks including ABC, CBS, and NBC. (But not Fox).

For more than a decade, however, there has been a rapid decline in viewing for prime-time programming, and especially in the 10 p.m. time period.

Currently on CBS its 10 p.m. weekday lineup includes “NCIS: Origins,” “FBI: Most Wanted,” “Elsbeth,” and “Blue Bloods.”

Now two years later, with streaming platforms continuing to make gains, there is a higher expectation that Shell could make some dramatic, industry-shaking moves at CBS.

This would work with the vision of the new incoming Skydance ownership of Paramount Global. CEO David Ellison wants to transform Paramount and CBS into more of a “modern” media company. But that would also have ripple effects.

If indeed CBS gives up time periods, longtime affiliates would need to re-evaluate their production/programming needs in terms of being able to foot higher programming costs in filling time periods.

Without high-value prime-time shows, local/regional advertisers would be shifting their media campaigns elsewhere.

Do local TV stations then need to develop their own TV shows, or perhaps tap into the national TV syndication market, either purchasing other original or library programming to fill those time periods?

The flip side to all this is that legacy TV broadcast networks are still generally in a positive revenue-generating position. Prime-time shows act as a marketing launchpad of sorts for their TV series that then move to their respective streaming TV platforms.

Prime time, however, continues to trend down due to cord-cutting -- which in turn has meant declining advertising revenue. Long-time TV network marketers continue to seek more reach -- and that means tapping into streaming platforms.

The betting this time around is that big show-stopping changes are coming under Shell. It’s a new TV season.