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Published: Thursday, 10/15/2009

Retail sales outside of autos make strong September showing

ASSOCIATED PRESS

WASHINGTON - Retail sales outside of autos showed surprising strength in September, but economists worry the rebound in all-important consumer spending will be short-lived as American families contend with rising unemployment and tight credit.

Removing autos, sales rose a better-than-expected 0.5 percent, led by gains at furniture stores, general merchandise stores, and specialty clothing stores.

Many economists saw that as a sign that Americans are starting to spend again, a critical development for any recovery because consumer spending accounts for 70 percent of economic activity.

"American consumers look like they are making their way back. They are cautious, but they are no longer panicked," said Mark Zandi, chief economist at Moody's Economy.com. "They are not spending with abandon, but they are spending enough to ensure that the nation's recovery will continue."

Retail sales actually fell 1.5 percent last month, the Commerce Department said yesterday, a plunge that reflected the end of the government's popular "cash for clunkers" program. Still, that drop was less than the 2.1 percent fall economists expected.

Analysts had expected increases at general merchandise stores following reports last week from retailers that sales grew in September at stores open at least a year compared with activity in September, 2008. It marked the first year-over-year rise in sales after more than a year of declines, according to data from the International Council of Shopping Centers and Goldman Sachs.

In a separate report, the Commerce Department said businesses slashed inventories for a 13th consecutive month in August. Inventories fell 1.5 percent in August, more than the 0.9 percent fall that analysts had expected. Inventories also dropped 1.1 percent in July, slightly larger than the 1 percent initially estimated.



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