Wells Fargo Economics says a soft September keeps holiday spending forecasts intact but leaning toward the lower end of the 3.5 percent–4 percent range
The run-up to the holiday shopping season usually comes with clearer momentum, but this year’s delayed federal data release has pushed retailers and analysts into a longer wait. With September retail sales numbers finally available after the government shutdown, the picture shows consumers easing off the throttle just as the industry enters its most important stretch. According to a Wells Fargo Economics report, “the 0.2 percent headline increase for the month was underwhelming,” and that weakness was reinforced by a 0.1 percent decline in control group sales, a key component feeding directly into consumer spending in GDP. The setback was compounded by downward revisions to August figures, leaving fourth-quarter spending on softer footing.
Within the broad retail basket, the categories that typically drive holiday revenue delivered uneven results. Online shopping fell 0.7 percent, a pullback that breaks from its strong run but still leaves ecommerce up 6 percent from September 2024. Wells Fargo points to timing as a likely factor, noting that Amazon’s Big Deal Days—formerly Prime Day—may have shifted consumer activity into October. As the report puts it, the event “was well telegraphed to consumers who may have put off some spending in September in favor of October.”
Sporting goods, clothing and department stores all posted declines in September. Other holiday-related categories ended positive, but the overall holiday-sales subset—retail excluding autos, gas and restaurants—was flat. Even with the soft print, Wells Fargo is keeping its 3.5 percent–4 percent holiday sales growth forecast unchanged, though it now sees results “closer to the lower end of our forecast range.”
Outside holiday shopping, auto and parts sales fell 0.3 percent. That drop surprised analysts who expected a gain, given strong unit sales data from Ward’s and the expiration of the federal EV tax credit at the end of September. Even with the decline, auto sales remain roughly 5 percent above year-ago levels, and September’s dip comes after three consecutive monthly gains. Wells Fargo warns that October likely brought further slowing, with unit sales posting their sharpest decline in five months.
Gasoline station sales rose 2 percent, but the boost came from price movements rather than increased driving. Though the average retail price for an unleaded gallon drifted lower over the month—continuing into October and reaching the year’s lowest levels—CPI data showed motor fuel prices rising at their fastest pace in two years. Because retail sales are reported nominally, that CPI bump lifted gas station revenue.
The September report doesn’t significantly alter Wells Fargo’s expectations for third-quarter GDP. The firm still projects real personal consumption expenditures to grow around a 3 percent annualized rate, helped by stronger spending earlier in the quarter. But the weaker September performance points toward a slowdown heading into year-end as job-market moderation and persistent price increases press on household budgets.
With the holiday period about to intensify, the delayed September data arrives late but still matters. The numbers suggest consumers are cautious, not absent. Lower-than-expected gains and a slip in key control group sales mean retailers enter November with less momentum than hoped, yet not enough to force forecast downgrades. If anything, the season starts with tighter margins for error: the growth Wells Fargo expects is still feasible, but the September slowdown makes the upper end of the range harder to reach.
