American Shoppers Keep Spending Despite High Prices, Early Third-Quarter Reports Show

Corporate earnings reports from the third quarter show that American buyers are still spending money even though inflation remains high. Businesses expected a drop in spending because diesel fuel prices had reached record levels in September and regular gas prices had gone up, while borrowing costs also stayed high. Even with these economic hurdles, retail sales grew by 0.8% in September after a 1.3% increase in August, aided by higher spending at gas stations.

Company Results

Coca-Cola beat expectations for earnings and revenue as North American sales stayed steady despite higher prices, leading the firm to raise its full-year earnings per share growth forecast to at least 11%. Royal Caribbean topped Wall Street estimates for earnings per share, served 2.7 million guests during the quarter which is a 9% yearly increase, and saw its stock climb more than 5% on Tuesday. Sherwin-Williams increased net sales by 7.9% compared to the previous year through higher selling prices, though raw material costs cut into profits. UPS surpassed revenue and earnings expectations with U.S. revenue climbing 4.5% to $14.86 billion, and the delivery firm boosted its full-year revenue outlook to roughly $92.6 billion while its shares also rose over 5%. Not all firms shared this success, as Whirlpool missed earnings and sales targets and lowered its full-year revenue outlook after North American net sales dropped over 8% for the period ending September 30.

Context

Corporate earnings reports are released every three months to give the public and investors a clear look at how well major businesses are performing. Consumer spending makes up a large part of overall economic activity, so tracking these retail trends helps analysts understand the health of the wider economy.