Americans stepped up their shopping last month as the
holiday season got under way, a sign lower gasoline prices and brisk job growth
are boosting the economy’s prospects. U.S. retail sales climbed a seasonally
adjusted 0.7% in November from a month earlier, the biggest jump in eight
months, according to the Commerce Department.
Excluding the volatile category of autos, sales rose 0.5% in
November. Economists surveyed by The Wall Street Journal had predicted overall
sales to rise 0.4% and sales excluding autos to climb 0.1% in November.
The report suggests the consumer-driven U.S. economy made
stronger gains in recent months than previously thought. Revised figures showed
retail sales grew 0.5% in October instead of the initially reported 0.3%.
Much of the latest burst in consumer spending has been
driven by car and auto-parts purchases, which climbed 1.7% last month. But
spending rose across every major category except gasoline, suggesting broad
strength and confidence among everyday Americans.
Indeed, the overall retail figure would have been higher if
not for a 0.8% fall in spending at service stations due to a sharp drop in
gasoline prices. Gas prices have fallen more than a dollar since the summer to
an average $2.679 a gallon this week, government figures show.
Lower gasoline prices weigh on overall retail sales because
they drain revenue at service stations. But they tend to support stronger
economic growth in the long term by boosting Americans’ confidence and
discretionary income. Spending on other goods carries greater economic benefits
than spending on gasoline, particularly if it supports more jobs.
Deutsche Bank economists estimate the drop in gasoline
prices—if sustained over several more quarters—will have freed up roughly $90
billion for Americans to spend on other items.
Overall, retail sales are climbing moderately. November’s
sales were 5.1% higher from a year earlier. But that has been enough to keep
the economy climbing at a steady pace.
Consumer spending accounts for more than two-thirds of the
goods and services produced in the U.S., making it the biggest factor behind
the economy’s growth. The U.S. economy grew at a 3.9% annual pace in the third
quarter after expanding at a 4.6% rate in the second quarter.
Many economists expect economic growth to cool to a pace of
between 2% and 3% in the current quarter, reflecting projections of lower
exports, higher imports and government spending.
Most expect consumer spending to pick up in the fourth
quarter, largely reflecting stronger job growth that has boosted overall
household income. The U.S. created 321,000 jobs in November and is on pace to
post its best year of job growth since 1999.
Click
here to access the full article on The Wall Street Journal.