Consumers are spending more. That doesn’t mean they can afford it.

Retail sales are rising, purchasing power is slipping, and shopping centers are still attracting investment. How long can all three remain true?

America’s cash registers are ringing. Unfortunately, they don’t tell us whether the customer can afford the tune.

US retail and food-service sales rose 6.3% year over year in September, according to Census figures released on October 15. A day earlier, the Bureau of Labor Statistics reported that real average hourly earnings had fallen 0.7% over the same year.

Both can be true. Retail sales measure dollars spent, without adjusting for price changes. Real earnings measure purchasing power. A bigger receipt is not necessarily evidence of a better shopping trip.

Nor does it establish that people bought fewer goods. That requires a closer look at prices and spending categories. But it does leave retail property owners with a question that buoyant sales headlines cannot answer: how much strain can shoppers and tenants absorb before it reaches the rent roll?

These are intentions, not evidence that the borrowing has already happened. ICSC also found that

| 83% could keep up with essential expenses.

The picture is more complicated than universal distress: people are protecting seasonal spending while making compromises elsewhere.

ICSC president and CEO Tom McGee described shoppers as

“more discerning and value-conscious”.

Meanwhile, the Federal Reserve’s October Beige Book reported that more than half its districts identified higher-income households as a driver of spending.

That matters to landlords. A national spending total can conceal very different prospects for a luxury destination, a discount center and a strip serving households with little money left after essentials.

September’s CPI release put annual inflation at 3.7%, up from 3.4% in August. Gasoline accounted for more than half the monthly increase. Energy therefore deserves a prominent place in this story alongside trade policy.

Research published by New York Fed economists on October 6 examined the administration’s 2025–26 tariffs. Their estimates suggest the full consumer-goods price effect of a tariff takes about a year to emerge, including indirect increases in US-made goods.

The authors also make an important distinction:

| tariff contributions to annual inflation can fade while prices remain higher. A bill that stops getting bigger has not necessarily become affordable.

For a retailer, either persistent high costs or renewed increases can complicate expansion plans. Strong revenue is reassuring only up to the point where someone asks what it cost to generate it.

Earlier Marcus & Millichap research identified constrained construction and existing leasing commitments as supports for occupancy. Its midyear construction pipeline amounted to just 0.3% of existing retail inventory.

That shortage provides a cushion. A viable retailer may have few attractive alternatives, while a vacated unit in a strong location can appeal to another business.

| Property runs on a different clock from the weekly grocery bill.

Existing leases can keep rent coming in while a tenant trims its refurbishment budget or postpones its next opening. If weak profitability persists, pressure could eventually emerge through tougher renewal negotiations, concessions or closures.

Those are possible transmission routes, not proof of a nationwide sequence already underway. Occupancy alone, however, cannot tell an owner everything about the financial health of the businesses behind the storefronts.

Inflation has a spare key to the landlord’s office

Owners need not wait for an empty unit to feel the effects.

If persistent inflation keeps borrowing costs elevated, refinancing can become harder even at a busy, well-leased property. Higher insurance, maintenance or construction costs can also squeeze returns or make a planned upgrade less attractive. Who bears those costs depends partly on lease terms, and recovering them from tenants can add to their burden.

There is an awkward countereffect. Expensive construction can deter competing developments, protecting existing centers from new supply. The same conditions that make a landlord’s renovation painful may stop a rival building across the road.

| Inflation is capable of making the moat more expensive to maintain while discouraging anyone from crossing it.

That helps explain why consumer pressure and investor interest can coexist. It does not mean every property is protected. Local demand, tenant finances and debt obligations determine how much comfort restricted supply provides.

The upcoming Christmas period will bringb receipts. The reckoning may take longer.