US retail sales beat expectations in boost to third-quarter GDP growth expectations
WASHINGTON (Reuters) -U.S. retail sales increased more than expected in September as households stepped up purchases of motor vehicles and spent more at restaurants and bars, cementing expectations that economic growth accelerated in the third quarter.
Strong demand illustrated by the report from the Commerce Department on Tuesday, however, raises the risk of the Federal Reserve hiking interest rates in December. The data followed on the heels of stronger-than-expected employment growth and consumer price readings in September.
«The economy looks like it is getting used to the new normal of interest rates being higher for longer because shoppers are not taking a break that's for sure,» said Christopher Rupkey, chief economist at FWDBONDS. «Fed officials have another rate hike this year up on their forecast board, and they will need to use it, if the economic data continues to surprise economists on the upside.»
Retail sales rose 0.7% last month. Data for August was revised higher to show sales advancing 0.8% instead of 0.6% as previously reported. Economists polled by Reuters had forecast retail sales rising 0.3% in September. Retail sales are mostly goods and are not adjusted for inflation.
They rose 3.8% year-on-year in September. Despite the show of resilience, headwinds are rising for consumers. Higher borrowing costs as the U.S. central bank tackles inflation have pushed credit card delinquencies to an 11-year high.
Consumers are increasingly relying on credit cards to fund purchases. Millions of Americans resumed payments on student loans in October, which economists estimated was equal to roughly $70 billion, or around 0.3% of disposable personal income.
Nevertheless, consumer spending continues to be driven by
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