Consumer spending may keep recession at bay
Despite economists' fears, consumers spent more all-around on everything from retail products to auto sales in October.
Although a new report shows that sales only rose a meager 0.5 percent, it's more than the 0.3 to 0.4 percent increase that economists surveyed estimated, according to Bloomberg and CNN. This boost in sales follows a 1.1 percent increase in September.
"Another recession is pretty unlikely," said Samuel Coffin, an economist at UBS Securities in Stamford, Connecticut, told Bloomberg. He added that the report "suggests a very strong start to the quarter. We'll continue expanding at a better pace."
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Among the biggest sectors with renewed sales interest was electronics and appliance store sales, which was up 3.7 percent, and sporting goods, hobby, book and music stores, which saw a 1.3 percent increase, according to Bloomberg. Auto sales also rose 0.4 percent at automobile dealers, after a 4.2 percent increase in September. Gains in consumer spending, which makes up about 70 percent of the economy, are important in helping America move past the recession, especially since the European debt crisis is still a present danger.
Multiple reasons were cited for the increase in shopping from producer prices falling for the first time in four months, allowing retailers to keep lower prices throughout the holiday season, to a drop in gas prices. Still, CNN reports that major retail chains reported a weaker gain in October sales at stores open at least a year, and consumer confidence reached low levels last seen during the Great Recession in late 2008 and early 2009
Still, despite Walmart's third quarter profit slipping 27 percent, the retailer reported its first quarterly revenue gain in nine consecutive quarters. Luxury brand Burberry also saw 27 percent profit in the six months ending Sept. 30.
However, economists warned that this might not be the beginning of a bolstered economy.
"All the recent evidence suggests that fourth-quarter GDP growth will be as good as in the third quarter, if not better," said Paul Dales senior U.S. economist for Capital Economics, told CNN. "Overall, the economy appears to be growing at a decent clip. We are not convinced that this will be carried into 2012, however."
