Retail sales set record in October
By Glenn Somerville
WASHINGTON (Reuters) – Cheap financing for new cars triggered a record surge in U.S. retail sales in October, the government said in a report that showed consumers were bouncing back from the shock of Sept. 11 attacks.
The Commerce Department said total retail sales zoomed up by 7.1 percent to a seasonally adjusted $306.83 billion last month, the strongest sales surge for any month on record, after shrinking by 2.2 percent in September.
Stripping out autos, sales rose 1.0 percent.
The overall October retail sales increase was nearly triple the 2.7 percent jump that Wall Street analysts had forecast and strongly implied that consumers were back in the shopping spirit, snapping up bargains on cars and clothing.
“Americans are recovering from their funk pretty darn quickly and it takes an awful lot to stop Americans from spending money,” said economist David Wyss of Standard and Poor’s in New York.
Consumer spending on goods and services is a key engine of U.S. national economic activity but retail sales is not a total proxy for overall spending. The economy contracted at a 0.4 percent annual rate in the third quarter and is widely seen posting another drop in the current fourth quarter.
A recovery is expected to begin sometime in 2002 and the strong rebound in retail business buttresses hopes that any recession will be relatively mild and short-lived.
The October climb of 1.0 percent excluding autos was far ahead of analysts’ expectations for a 0.2 percent rise and followed a drop of 1.5 percent in September. Sales by new-car dealers jumped by 26.4 percent to $87.4 billion last month, the biggest monthly gain on record, after declining 4.5 percent in September.
U.S. automakers offered zero percent financing on new cars in the wake of the Sept. 11 attacks, even on rarely discounted models like General Motors’ Corvette sports car, which helped fire October new-car sales to record heights.
Sales at clothing stores soared 6.9 percent to $14.3 billion in October, more than reversing a 5.9 percent drop in September.