WASHINGTON -- U.S. retail sales rose less than expected in August even as demand increased for automobiles and other big-ticket items, the latest sign that economic growth slowed in the third quarter.
The Commerce Department said Friday retail sales increased 0.2 percent last month as Americans bought automobiles, furniture and electronics and appliances. However, they cut back on clothing, building materials and sporting goods.
Retail sales, which account for about 30 percent of consumer spending, were still up for a fifth consecutive month. They had gained 0.4 percent in July and economists polled by Reuters had expected them to rise 0.4 percent last month.
Stripping out automobiles, gasoline and building materials, so-called core sales were up 0.2 percent after rising 0.5 percent in July. Core sales correspond most closely with the consumer spending component of gross domestic product.
Though core sales slowed a bit from July, they matched the second quarter's 0.2 percent average monthly gain.
Despite the signs of a slowdown in demand this quarter, that will not change expectations the Federal Reserve will announce cutbacks to its huge monthly bond purchasing program at next Tuesday and Wednesday's policy meeting.
The retail sales report added to July data on consumer spending, industrial production, housing starts and durable goods orders that have suggested growth took a step back from the first quarter's 2.5 percent annual pace.
Sales at auto dealerships rebounded 0.9 percent last month after falling 0.5 percent in July. Excluding autos, sales nudged up 0.1 percent after rising 0.6 percent the prior month.
Sales at building materials and garden equipment suppliers fell 0.9 percent. Clothing store receipts declined 0.8 percent, the biggest fall in nearly 1½ years, reflecting weak back-to- school sales. That may not be a good sign for the holiday season.
9 Numbers That'll Tell You How the Economy's Really Doing
U.S. Retail Sales Miss Expectations, Point to Slow Growth
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.