September retail sales post strong gain

Threats to the global economic recovery have mounted over the course of the second half of this year, but government data released Friday indicates the U.S. might avoid a double-dip recession.

The Commerce Department said that advance estimates of U.S. retail and food services sales for September hit $395.5 billion. That figure represents a 1.1 percent increase from levels logged in August and a jump of 7.9 percent from September 2010.

Moreover, total sales between July and September of this year climbed 8 percent compared to the same period the year prior. The Commerce Department also affirmed retail sales rose from July to August this year, upwardly revising their prior estimate to illustrate 0.3 percent growth.

Consumer spending is vastly important to the U.S. economy – and to developed economies as a general rule. Unlike in China, where consumer spending makes up less than 45 percent of GDP, it accounts for more than two quarters of total economic output in the U.S. Analysts therefore met the positive numbers with a collective sigh of relief, especially considering the flurry of negative data that has emanated from Washington, D.C. over the past few months.

September retail trade sales in the U.S. registered a 1.1 percent increase from August, and an 8.1 percent uptick from September 2010. The automobile market continued to pace gains, government analysts affirmed, as many carmakers reported brisk sales gains in the U.S.

Worldwide automobile sales have surged in the wake of the global recession, but the 9.0-magnitude earthquake and tsunami that struck Japan on March 11 spurred massive supply chain disruptions. Japanese automakers have struggled to return to full manufacturing capacity following the catastrophic damage inflicted by the natural disasters, but analysts asserted increasing sales indicate firms had largely navigated the worst of the crisis.

The Associated Press reports U.S. consumers spent more on clothes, cars and furniture in September, propelling retail sales to their largest gain in seven months. Economists welcomed the news, but warned heavy debt burdens and the nation's beleaguered housing and labor markets could stymie future growth.

Analysts said that excluding car sales growth was still impressive, registering 0.6 percent. Such a high figure could suggest sales during the U.S. holiday shopping season will be brisk, but critics are decidedly less optimistic.

The Commerce Department issued a separate report on Friday as well, one that underscores the relative optimism businesses have in the economy. September marked the 20th consecutive month businesses added to their stockpiles, the government said. Coupled with the third straight monthly rise of total retail sales, such data shows companies are confident enough to continue to stock their shelves.

The Commerce Department's initial estimates of monthly retail sales are based on a sample, however, and some analysts questioned whether final reports released later in the month would confirm the robust estimates. Nonetheless, economists asserted any rise in consumer spending – especially given the tepid economic climate – is a hopeful sign the nation will avoid entering into another recession.

September retail sales figures illustrate "households are not completely down and out," Capital Economics senior U.S. economist Paul Dales contended. He warned, though, unless the unemployment rate ebbs, it is unlikely retail sales would remain strong.

"Sales growth is unlikely to remain strong," he said. "So although a recession has become less likely, households still can't be relied on to drag the U.S. economy out of its continued malaise."

If high gas prices return, it could further hurt any fledgling recovery, economists say. September sales at gasoline stations rose 1.2 percent from August, and increased by a whopping 20.3 percent from September 2010.