Retail Sales In July Point To Strengthening Economy

Retail sales increased during July, the first rise in four month, leading economists to believe that consumer spending could push the nation to third quarter growth.

The consumer demand climbed for a range of goods, from cars to electronics, Reuters reported. Commerce Department data showed that total sales rose 0.8 percent during the July, the largest one-month increase since July and well more than what economists had expected.

The good economic news of retail sales was boosted by a separate report that showed US producer prices increased in July at the fastest pace since January.

Positive retail sales could mean that the economic slowdown of the second quarter is more of a one-off, analysts believe.

“Here comes the U.S. consumer,” said Harm Bandholz, an economist at UniCredit in New York.

The positive retail sales have showed in other areas of the economy. Home Depot posted a second quarter profit that beat analysts’ estimates, one that came largely as a result of increased sales. The company in turn boosted its expectations for the fiscal year.

The better retail sales could be boost to Pres. Obama, who will need a robust — or at least growing — economy to help his re-election hopes. After the first few months of spring brought tepid growth, increases in jobs created and retail sales will give the president some help, political experts say.

Better-than-expected retail sales could also mean that the Federal Reserve can maintain more of a hands-off approach to the economy, many experts believe. Though some have called on the Fed to produce some kind of stimulus, some analysts like Chris Williamson, chief economist at Markit, disagree, the Weekly Standard reported.

Positive retail sales would “argue against the need for additional stimulus from the Fed,” Williamson said.