Consumer Spending Recovery in October 2025: Retail Sector Analysis and Market Implications

This analysis is based on the CNBC report [1] published on November 10, 2025, which highlighted a significant rebound in consumer spending during October 2025. The data, sourced from the CNBC/NRF Retail Monitor powered by Affinity Solutions’ actual credit card spending data, revealed a strong start to the fourth quarter retail season after a sharp September decline [1].

The October recovery demonstrated notable resilience in consumer behavior, with total retail sales (excluding automobile dealers and gasoline stations) increasing 0.6% month-over-month on a seasonally adjusted basis and 5% year-over-year on an unadjusted basis [2]. This rebound followed September’s concerning 0.66% monthly decline, suggesting the September weakness may have been temporary rather than indicative of a broader consumer spending trend [2].

Financial markets reacted positively to the retail data, with the SPDR S&P Retail ETF (XRT) gaining 0.81% to $81.66 on November 12, 2025, outperforming broader market indices [0]. This outperformance occurred despite overall market weakness, with the S&P 500 declining 0.24% to 6,851.15 and NASDAQ falling 0.68% to 23,402.99 [0]. The Dow Jones showed modest strength with a 0.66% gain to 48,330.51 [0].

However, individual retailer performance was mixed. Amazon (AMZN) underperformed with a 1.47% decline to $245.44, while Walmart (WMT) showed relative stability with only a 0.12% decline to $103.31 [0]. Target (TGT) fell 0.31% to $91.30 [0]. This divergence suggests that while the overall retail spending environment improved, investors may be differentiating between retail subsectors and business models.

The October data revealed significant variation across retail categories [2]:

• Digital products: +22.39% YoY, +2.02% MoM
• Clothing and accessories: +7.89% YoY, +1.42% MoM
• Sporting goods/hobby/music/books: +7.19% YoY, +0.09% MoM

• General merchandise stores: +6.99% YoY, +0.58% MoM
• Electronics and appliances: +6.58% YoY, +0.13% MoM
• Grocery and beverage stores: +4.08% YoY, +0.59% MoM

• Building and garden supply stores: -8.52% YoY, -0.81% MoM
• Furniture and home furnishings: -1.70% YoY, -0.08% MoM

NRF President and CEO Matthew Shay attributed the consumer resilience to three key factors: “wage growth outpacing inflation, historically low unemployment, and wealth effects from strong stock market valuations” [2]. This combination suggests that consumer spending power remains robust despite broader economic uncertainties.

The data methodology is particularly noteworthy - the CNBC/NRF Retail Monitor uses actual, anonymized credit and debit card purchase data from over 150 million cards, providing more real-time accuracy than traditional Census Bureau survey data that requires monthly or annual revisions [2]. However, the methodology excludes automobile dealers, gasoline stations, and restaurants from core calculations, which may limit the comprehensive view of total consumer spending.

The significant decline in building and garden supply stores (-8.52% YoY) and continued weakness in furniture and home furnishings (-1.70% YoY) may signal broader housing market concerns [2]. These categories are typically sensitive to housing market conditions and consumer confidence in making large-ticket purchases. The weakness in these sectors could be an early indicator of housing market stress that may eventually impact other retail categories.

The extraordinary growth in digital products (+22.39% YoY) highlights the continued acceleration of digital consumption patterns [2]. This trend may create both opportunities and challenges for traditional retailers, potentially pressuring brick-and-mortar business models while benefiting companies with strong digital capabilities.

The analysis reveals several risk factors that warrant attention from market participants and decision-makers:

1. Inflation Persistence Risk
   : While current wage growth is outpacing inflation, any reversal of this trend could significantly impact consumer spending power [2].

2. Labor Market Deterioration
   : The historically low unemployment rate supporting consumer resilience could be vulnerable to economic shocks or policy changes [2].

3. Market Volatility Impact
   : Declining stock market valuations could reduce the wealth effects currently supporting consumer spending [2].

1. Digital Commerce Opportunity
   : The 22.39% YoY growth in digital products suggests continued opportunities for companies with strong digital platforms and e-commerce capabilities [2].

2. Housing-Related Risk Exposure
   : The weakness in building supplies and furniture sectors may indicate broader housing market concerns that could spread to other retail categories [2].

3. Holiday Season Uncertainty
   : While the NRF forecasts 2025 holiday sales to increase between 3.7% and 4.2% compared to 2024, potentially surpassing $1 trillion for the first time, sustaining October’s momentum through the holiday season remains uncertain [2].

Decision-makers should be aware of several information limitations in the current analysis:

1. Real Purchasing Power
   : The data doesn’t provide inflation-adjusted spending analysis, making it difficult to assess real purchasing power changes [2].

2. Demographic Variations
   : National spending data may mask significant differences across income levels, age groups, or geographic regions [2].

3. Payment Method Shifts
   : The analysis doesn’t address potential shifts between credit, debit, and cash purchases, which could indicate changes in consumer financial behavior [2].

The October 2025 retail spending data demonstrates consumer resilience following September’s decline, with broad-based recovery across most retail categories except housing-related sectors. The methodology using actual credit card data provides more accurate real-time insights than traditional survey methods [2]. While the retail sector ETF outperformed broader markets, individual retailer performance varied significantly [0].

The NRF’s optimistic holiday forecast of 3.7-4.2% growth suggests confidence in continued consumer momentum, though sustaining this pace will depend on maintaining the current economic conditions of wage growth outpacing inflation and low unemployment [2]. The divergence between strong digital product growth and weak housing-related categories indicates sector-specific dynamics that may require differentiated strategies for retailers operating across different segments.

Market participants should monitor November retail data, early holiday season performance, consumer confidence metrics, and credit card delinquency rates for early warning signs of potential shifts in consumer spending patterns [2]. The current data suggests a cautiously optimistic outlook for retail, though the sustainability of the October rebound remains to be confirmed through the critical holiday shopping period.