Providing much-needed good news for the US economy, the Commerce Department announced that retail sales jumped 7.1% in October, the largest monthly rise ever recorded.
Following a revised 2.2% drop in September, the bounce-back was driven by a 26.4% leap in auto sales, fuelled by 0% finance deals and other sales promos. Excluding vehicle sales, October saw 1% growth, still well ahead of projections of 0.4%.
The only two sectors to register a dip in sales were furniture (down 0.5%) and gasoline, which dropped 6.4% due to lower fuel prices. Excluding automobiles and gasoline, retail sales jumped 1.8% in October, virtually cancelling out the 1.9% fall in September.
The figures prompted hopes that consumer spending – accounting for around two-thirds of the US economy – is holding up in the face of widespread layoffs. However, others noted that sales are still weaker than earlier in the year, and suggested that many of October’s sales were the result of purchases delayed from September.
In a separate survey, economists polled by the National Association for Business Economics forecast that with federal aid, the economy will emerge from recession by April, with gross national product growth hitting 4% in the fourth quarter.
Earlier this week, the National Bureau of Economic Research, seen as the official arbiter of when recessions start and finish, announced it was “possible” the US economy had slipped into recession in March.
News source: Wall Street Journal