Slump in retail sales could slow economic growth
WASHINGTON Americans are getting more tight with their money, which could retard economic growth in the months to come.
Although people, bought more cars, furniture and electronics in August, they held back spending on most other retail purchases, the Commerce Department said Friday.
"Retailers are seeing sales gains, but those modest gains are simply not enough to generate any enthusiasm," said Jim Baird, Chief Investment Officer for Plante Moran Financial Advisors. "Consumer confidence may be rising, but spending is still being held relatively in check by limited income growth."
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Spending at retail businesses rose 0.2 percent last month, the smallest gain in four months and below consensus forecasts of 0.5 percent. Excluding volatile spending on autos, gas and building supplies, sales increased 0.2 percent, less than half July's 0.5 percent gain.
Sales between May and July were up 5.2 percent from the year-ago period. Weaker retail sales in recent weeks suggest consumers may be growing more cautious about spending, which could slow economic growth. Retail sales are closely watched because they are the government's first look at consumer spending, which accounts for 70 percent of economic activity.
Jim O'Sullivan, chief U.S. economist with High Frequency Economics, described the latest retail figures in a research note as "a bit weaker than expected." He also noted that real consumer spending in the third quarter is up only 1.5 percent, down from 2 percent in the first half of the year.
Sales of autos and furniture both jumped 0.9 percent. Electronics and appliance sales rose 0.8 percent. But clothing sales dropped 0.8 percent and sporting goods sales also fell.