WASHINGTON: US retail sales rose more than expected in September as households boosted motor vehicle purchases and spent more at restaurants and bars, indicating the economy ended the third quarter on a strong note.
Retail sales rose 0.7% last month, the Commerce Department said Tuesday. The data for August has been revised upwards to show that sales increased by 0.8% instead of the previously reported 0.6%.
Economists polled by Reuters had forecast retail sales to rise 0.3%. Retail sales consist primarily of goods and are not adjusted for inflation. They were also probably flattered by higher gas prices, which boosted revenues at gas stations.
Despite the show of resilience, consumer headwinds are increasing. Higher interest rates as the Federal Reserve tackles inflation have pushed credit card delinquencies to their highest level in 11 years. Consumers are increasingly relying on credit cards to finance purchases. Millions of Americans resumed student loan payments in October, which economists say amount to about $70 billion, or about 0.3% of disposable personal income.
Nevertheless, consumer spending continues to be driven by a tight labor market, with the economy adding 336,000 jobs in September. Excess savings accrued during the COVID-19 pandemic remain higher than previously estimated.
Excluding cars, gasoline, building materials and food services, retail sales rose 0.6% in September. The data for August has been revised upwards to show that these so-called core retail sales increased by 0.2% instead of 0.1% as previously reported.
Core retail sales most closely resemble the consumer spending component of GDP. Consumer spending is expected to accelerate in the third quarter, thanks to a strong increase in July. Spending on services also remains solid, which should increase overall consumption.
Gross domestic product growth estimates for the third quarter are currently at 5.1% on an annual basis.
The economy grew 2.1% in the April-June quarter and continues despite the Fed raising its key overnight rate by 525 basis points since March 2022 to the current range of 5.25%-5.50%.
Retail sales rose 0.7% last month, the Commerce Department said Tuesday. The data for August has been revised upwards to show that sales increased by 0.8% instead of the previously reported 0.6%.
Economists polled by Reuters had forecast retail sales to rise 0.3%. Retail sales consist primarily of goods and are not adjusted for inflation. They were also probably flattered by higher gas prices, which boosted revenues at gas stations.
Despite the show of resilience, consumer headwinds are increasing. Higher interest rates as the Federal Reserve tackles inflation have pushed credit card delinquencies to their highest level in 11 years. Consumers are increasingly relying on credit cards to finance purchases. Millions of Americans resumed student loan payments in October, which economists say amount to about $70 billion, or about 0.3% of disposable personal income.
Nevertheless, consumer spending continues to be driven by a tight labor market, with the economy adding 336,000 jobs in September. Excess savings accrued during the COVID-19 pandemic remain higher than previously estimated.
Excluding cars, gasoline, building materials and food services, retail sales rose 0.6% in September. The data for August has been revised upwards to show that these so-called core retail sales increased by 0.2% instead of 0.1% as previously reported.
Core retail sales most closely resemble the consumer spending component of GDP. Consumer spending is expected to accelerate in the third quarter, thanks to a strong increase in July. Spending on services also remains solid, which should increase overall consumption.
Gross domestic product growth estimates for the third quarter are currently at 5.1% on an annual basis.
The economy grew 2.1% in the April-June quarter and continues despite the Fed raising its key overnight rate by 525 basis points since March 2022 to the current range of 5.25%-5.50%.
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