Retail Sales Grow as Business Costs Climb
American shoppers are still spending, and that gives businesses something useful to build on. The Census Bureau’s October 15 report showed retail and food-service sales rising 0.8% in September, following an upwardly revised 1.3% gain in August. We welcome that resilience, but the increase was just 0.2% when gasoline stations were excluded, and none of these figures adjusts for inflation. More money passing through the till therefore tells us less about earning power than the headline might suggest.
That distinction matters because the separate producer-price report points to a tougher pricing environment as well. Prices received by domestic producers for final-demand goods and services rose 1.3% in September, compared with 0.5% in August, while the increase excluding food, energy and trade services accelerated from 0.3% to 0.5%. These are selling prices rather than a direct measure of every business’s costs, but they reinforce the need to ask whether companies can protect what they keep after paying their bills.
For business development companies, which lend to businesses, that question leads straight to the borrowers supporting their interest income. If a borrower can maintain demand and recover higher costs through its prices, it has more room to service its debt; if costs absorb the extra revenue, stronger sales may leave the lender with little additional protection. Furthermore, higher income from floating-rate loans is only helpful while borrowers can afford the payments, and the lender’s own financing costs also take a share.
The same logic reaches property owners through their retail tenants, whose ability to pay rent and renew leases depends on keeping their businesses profitable. Continued spending helps, but we would put more weight on tenants retaining healthy profits than on sales growth inflated by higher prices.
There is some encouragement on financing, although it remains conditional. In an October 14 Reuters interview, San Francisco Fed President Mary Daly said further rate increases were probably needed but signaled no urgency to act at the October meeting. A pause could spare borrowers an immediate additional increase in policy rates, although her comments neither establish a decision nor reduce their existing interest bills.
Our view is that this is encouraging demand news, but it is not yet convincing evidence of stronger dividend support across the Fly High universe. We want the next results to show borrowers keeping more profit after costs and lenders collecting their interest in cash, because that would turn a reassuring spending headline into a stronger income case. Until then, we give resilient sales credit, but earning power deserves the deciding vote.
Sources
- U.S. Census Bureau: September retail and food-service sales, October 15, 2026
- Bureau of Labor Statistics: September producer prices, October 15, 2026
- Reuters: Daly interview, October 14, 2026
This article is general information, not personalized investment advice. Fly High Investing may hold securities discussed in this article.