Retail sales jumped in August, spurred by widespread gains beyond the increases of auto and gasoline sales that economists expected. The report is a sign that consumers may be less cautious about spending as the economy recovers. Consumer spending is closely watched because it accounts for about 70% of the nation’s economic activity.
WASHINGTON (AP) — Retail sales jumped in August, spurred by widespread gains beyond the increases of auto and gasoline sales that economists expected.
The report is a sign that consumers may be less cautious about spending as the economy recovers. Consumer spending is closely watched because it accounts for about 70 percent of the nation’s economic activity.
The Commerce Department said Tuesday that retail sales rose a seasonally adjusted 2.7 percent last month, after falling 0.2 percent in July. That beat analysts’ expectations of a 2 percent increase, according to a survey by Thomson Reuters.
Excluding autos, sales rose 1.1 percent, ahead of an expected 0.4 percent jump. Excluding autos and gas, sales rose 0.6 percent.
Auto sales soared 10.6 percent, the most in almost eight years due mainly to the government’s popular Cash for Clunkers program. Gas station sales rose 5.1 percent, as prices at the pump rose in August. Economists expected increases in both categories, but sales also rose at electronics and appliance stores, department and sporting goods stores.
The clunkers program, which ended last month, provided consumers with rebates of up to $4,500 if they traded in older gas-guzzlers for new, more fuel-efficient models. The incentive boosted car sale 30 percent in August, after a 2.4 percent rise in July.
Many economists expect consumer spending to increase in the current July-September period, after it fell in the second quarter, mostly because of the clunkers program. That could cause the economy to grow by as much as 3 to 4 percent in the third quarter, many economists expect, helping to end the worst recession since the 1930s.
But analysts worry that without consistent consumer spending growth, the recovery could weaken next year, as government stimulus efforts end.
Other recent economic reports have been positive. Last week, the Federal Reserve said in a regional survey that the economy is stabilizing or improving in the vast majority of the country.
Meanwhile, President Barack Obama on Monday credited his administration and the $787 billion stimulus package rammed through Congress in the first days of his taking office for helping to prevent an even worse economic downturn.
“And though I will never be satisfied while people are out of work and our financial system is weakened, we can be confident that the storms of the past two years are beginning to break,” Obama said in a speech on financial reform in New York.
The nation’s gross domestic product, the broadest measure of the economy’s output, fell 5.5 percent in last year’s fourth quarter and the first three months of this year, the worst six-month showing in nearly 50 years.
But in the April-June quarter the decline slowed to 1 percent and many analysts expect the economy will grow in the second half of this year.