Retail sales fell 1.5% in September with the end of the "cash for clunkers" program, but consumer spending rose in many categories, lifting hopes that the economic recovery is gaining momentum at the start of the holiday shopping season.
Excluding sales of autos and parts, total retail and food sales increased 0.5%. It was a welcome sign of consumer activity after the deepest downturn in a generation. August sales were revised downward 0.5 percentage point to a 2.2% increase. The government's monthly retail-sales tally isn't adjusted for inflation.
The retail-sales data prompted a few economic prognosticators to raise their forecasts for third-quarter gross domestic product. St. Louis forecasting firm Macroeconomic Advisers raised its forecast of third-quarter GDP to an inflation-adjusted 3.4% annual rate from 3.1% before the sales data came out.
On Wednesday, Federal Reserve Governor Daniel Tarullo said economic growth appeared "to have moved back into positive territory in the third quarter."
Whether that growth can be sustained is another matter. With unemployment still rising and myriad government programs propping up the U.S. economy, consumers don't appear able or willing to rush back to their old spending habits.
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