Americans spent briskly at retailers in recent months, supporting hopes for a strong holiday shopping season and giving the economy momentum. Retail sales- measuring spending at restaurants, clothiers, online stores and other shops- rose 0.8% in October from the prior month, the Commerce Department said Tuesday. Sales grew 1% in September, revised figures showed, up from a previously reported 0.6% increase.
Those gains marked the best two-month stretch of sales in at least two years. September and October are shaping up to be the best two-month stretch for retail sales since early 2014. The consumer is in very good shape and is poised to continue to lead the economy forward based on rising wages, low unemployment and clean balance sheets. Some economists said the outlook of rising consumer spending, a steady labor market and building inflation will nudge the Federal Reserve closer to raising interest rates. Fed policy makers are set to convene once more this year- Dec. 13-14- and have indicated they are inclined to raise rates at that point if signs suggest a steadily improving economy.
Consumer spending accounts for more than two-thirds of economic output in the U.S., and Americans’ willingness to shell out more is a big factor behind the economy’s rebound in recent months. Economic growth, however, remains sluggish overall this year. Tuesday’s report showed that strong car sales accounted for much of the bounce in retail sales last month, as well as higher gasoline prices that drove up spending at service stations. But spending grew across a range of items, including construction materials, groceries and health care products. Excluding car purchases, sales rose 0.8%.
