America On A Buying Spree

Consumers spent like there's no Fed in August.

Boosted by purchases of autos, gasoline and clothing, retail sales rose 1.2 percent to $252.4 billion in August, the Commerce Department said Tuesday. Excluding autos, sales rose 0.7 percent.

In the past year, retail sales have soared 10.6 percent.

Economists surveyed by CBS.MarketWatch.com were expecting total sales to rise 0.8 percent and ex-auto sales to rise 0.4 percent.

The increase in consumer spending, the biggest since February, came as the Federal Reserve is trying to delicately tap on the economy's brakes to slow demand before inflationary pressures gather.

The continued strong performance of the consumer complicates the Fed's task as it tries to keep inflation under control while allowing the economy to work. Fed officials have warned that high demand by consumers is driving the unemployment rate so low that firms will feel obligated to raise wages to attract and retain good workers.

Still, few signs of inflation have appeared outside of the energy sector, where the doubling of crude oil supplies has raised prices sharply. The Labor Department will release its latest report on inflation on Wednesday.

Most analysts do not expect the Fed to raise the Fed funds rate at the Oct. 5 meeting of the Federal Open Market Committee.

In August, sales at auto dealers rose 2.5 percent to $64.8 billion, another blowout month in a year that's seen sales rise 19.3 percent.

Hardware, gardening and building supply stores also saw strong sales in August: up 1.1 percent to $15.2 billion. Furniture sales increased 0.7 percent to $13.6 billion.

All told, sales of durable goods surged 1.8 percent to $106.8 billion, an increase of 14.1 percent over August 1998.

In the nondurable sector, gasoline sales rose 2.1 percent to $15.4 billion on higher prices at the pump.

Sales at general merchandise stores increased just 0.3 percent to $31.9 billion, however, sales at apparel stores climbed 1.3 percent to $11.4 billion.

Sales at food stores rose 0.3 percent to $38.3 billion, sales at restaurants and bars rose 0.1 percent to $23.8 billion, and sales at drug stores rose 0.9 percent to $10 billion.

Sales in July were revised higher to 1 percent from 0.7 percent previously reported and June's sales were changed to a loss of 0.1 percent from a loss of 0.2 percent.

Written by Rex Nutting, Washington bureau chief for CBS MarketWatch