By Emiliana Molina
Consumer spending at retail stores rose less than expected in September as Americans spent less on non-essential items like electronics and more on cars and trucks.
Retail sales increased a seasonally adjusted 0.1 percent in September, according to the U.S Department of Commerce, below the 0.2 percent rise economists had forecast. The government revised August sales downward by 0.2 percentage points.
Excluding sales of autos, trucks and parts, which can be volatile month-to-month, sales at U.S. retailers fell 0.3 percent. Economists said weakness in so-called “core” retail sales may be cause for concern.
“September news and downward revisions to August suggest we’re ending on a sluggish note that doesn’t bode well for momentum heading into Q4,” said Avery Shenfeld, managing director and chief economist of CIBC.
[field name=”Retailfood2015″]
Consumer spending accounts for nearly 70 percent of the U.S economy, so any hint of a slowdown raises concerns that Americans are growing more cautious in the face of China’s flagging economy, falling U.S. exports and volatile global markets.
Federal Reserve officials are closely tracking consumer spending as they consider whether to raise interest rates in 2015. A rise in interest rates could further slow the economy by making it more expensive for consumers and businesses to borrow money, something the Fed would be less likely to do if American consumers are running out of steam.
Following the report, economists downgraded their estimates for growth in the third quarter to 0.9 percent from 1.0 percent, according to GDPNow on the Federal Reserve Bank of Atlanta’ website. That would be a sharp deceleration from the 3.9 percent GDP growth in the second quarter.
Michael Feroli, chief U.S. economist at JPMorgan, said he is expecting “still-solid” real consumer spending in the summer quarter.
“The consumption picture has now gone from great to good,” Feroli said. “The September outcome was just a return to earth after a few very strong summer months for retail spending.”
Among the bright spots in September spending, sales at restaurants and bars rose 0.7 percent; sporting goods and hobby items increased 0.9 percent; and furniture and furnishings had a 0.6 percent increase.
Sales at motor vehicles and parts dealers accelerated in September with a 1.7 percent increase, compared with a 0.4 percent rise in August.