Economic Watch: Retail Sales Rebound But Consumers Less Upbeat
Retail sales in the U.S. posted a solid gain in September, indicating consumers remain confident about the economy – but a separate report revealed that certainty is being hit by the race for White House.
According to the Commerce Department, the 0.6% increase in retail sales last month follows a 0.2% drop in August, slightly better than the originally estimated 0.3% decline. This latest figure is in line with expectations from a consensus estimate of economists surveyed by The Wall Street Journal and is the biggest increase in three months.
When compared to a year earlier, September’s level increased 2.9%. But the third quarter performance of a 0.7% improvement is not as strong as it was in the second quarter of the year.
Control retail sales, used to calculate the gross domestic product and excluding such categories as autos, gasoline stations and building materials, rose a weaker-than-expected 0.1% after a 0.1% drop in August.
The bounce in overall September retail sales, while encouraging, was not as broadly based as had been hoped, according to Paul Ferley, assistant chief economist at Royal Bank of Canada Economics.
“It will still contribute to third quarter real consumer spending rising a solid 2.6% at an annual rate. Though this will be down from the 4.3% surge recorded in the second quarter, it represents an above-average increase,” he said. “With the third quarter expected to see less of a drag from inventories, this strength in consumer spending should help send overall third quarter gross domestic product growth to an above-potential rate of around 3%.”
If this happens with the GDP, this would be double the 1.4% gain recorded in second quarter of the year.
“As the Fed becomes convinced that this stronger growth will be sustained, it will return the central bank to tightening mode,” Ferley said. “Our forecast assumes such is …Read the rest of this story
