Retail sales: Consumers still spending

@CNNMoney November 15, 2011: 9:56 AM ET

NEW YORK (CNNMoney) -- Consumers kept hitting the stores in October, despite economic headwinds and uncertainty that many economists had feared would keep them from spending.

The Commerce Department reported Tuesday that retail sales were up 0.5% compared to September, just above the 0.4% forecast of economists surveyed by Excluding auto sales, retail sales shot up 0.6%, three times stronger than expected.

Part of what helped consumer spending was a modest drop in gas prices during the month. That lowered the amount consumers spent at gas stations by $363 million in the month, freeing them to spend elsewhere.

The pick-up in retail sales came even as consumer confidence in the month fell sharply to levels last reached during the depths of the Great Recession in late 2008 and early 2009. In addition, major retail chains reported a weaker-than-expected gain in October sales at stores open at least a year.

Encouraging to economists was the 3.7% jump in electronics and appliance store sales, and a 1.3% rise at sporting goods, hobby, book and music stores. That seemed to suggest an appetite by consumers to spend heading into the all-important holiday shopping season, helping the economy overall.

"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. "Overall, the economy appears to be growing at a decent clip. We are not convinced that this will be carried into 2012, however."

The overall gain, and the rise excluding autos, were both more modest than the 1.1% increases reported in September. Still it was a solid month for consumer spending and gave further assurance that the U.S. economy does not appear on the cusp of falling into a new recession, as many economists had feared earlier this summer.

Earlier Tuesday, Wal-Mart Stores (WMT, Fortune 500), the nation's largest retailer, reported increased sales at stores open at least a year, along with a rise in profits for the fiscal third quarter.

Home improvement retailer Home Depot (HD, Fortune 500), the other retailer represented in the Dow Jones industrial average, also reported improved third-quarter earnings and sales earlier Tuesday. To top of page

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