The Commerce Department is reporting a drop in U.S. retail sales in September. But there is little evidence that Americans are closing their wallets.
Consumer spending accounts for roughly two thirds of overall economic activity in the United States. So word of a 0.2 percent dip in retail sales might seem like a dose of bad news, coming at a time when the economy is emerging from a prolonged slow-growth period.
But a closer look at the numbers reveals a different picture. The Commerce Department reports that excluding sales of automobiles, which fell 1.6 percent, retail sales actually rose a modest 0.3 percent in September, as Americans spent more on building materials, clothes, and food.
Furthermore, revised figures show that retail sales surged by 1.4 percent in July and 1.2 percent in August. The numbers were significantly higher than previous readings, and marked the first time in more than three years that the U.S. economy recorded back to back jumps exceeding 1 percent of retail sales.
Analysts say consumers have been aided by record low interest rates and federal tax breaks. The consensus view among economists is that the U.S. economy will grow at an annual rate of 4 to 5 percent for the second half of this year.