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Caution creeps into consumer spending

Raegan Jackson, 10, picks out a backpack last month at a Target in Lynchburg, Va. U.S. retailers report that consumers have been reluctant to spend freely for back-to-school shopping.

Associated Press

Raegan Jackson, 10, picks out a backpack last month at a Target in Lynchburg, Va. U.S. retailers report that consumers have been reluctant to spend freely for back-to-school shopping.

WASHINGTON — Americans boosted their spending at retail businesses only modestly in August, indicating that economic growth remains sluggish. Consumers bought more cars, furniture and electronics last month, but held back on most other purchases.

Spending at retail businesses rose just 0.2 percent last month, the Commerce Department said Friday. Excluding volatile spending on autos, gas and building supplies, sales in August increased just 0.2 percent, or less than half July's 0.5 percent gain.

Consumers may be growing more cautious about spending, a trend that could slow economic growth in the July-September quarter. Slow wage growth, modest job gains and higher taxes have limited Americans' spending power.

"Consumer spending remained stuck in middle gear in the summer," said Sal Guatieri, an economist at BMO Capital Markets.

Guatieri forecasts that spending is growing at an annual rate of roughly 2 percent in the current July-September quarter, about the same as the previous quarter. That suggests economic growth is slowing to an annual rate of about 2 percent, down from the 2.5 percent annual rate that the government estimated for the April-June quarter.

Sales of autos and furniture both jumped 0.9 percent in August. Electronics and appliance sales rose 0.8 percent. But clothing sales dropped 0.8 percent and sporting goods sales also fell.

Many retailers said in recent weeks that shoppers have been reluctant to spend freely for back-to-school shopping. According to a tally of 10 retail chains by the International Council of Shopping Centers, sales rose 3.6 percent last month. That's down from a 6 percent gain in August 2012.

More key economic reports

• Higher energy costs pushed U.S. wholesale prices up 0.3 percent last month. Prices rose a modest 1.4 percent above the past year, the lowest one-year gain since April. Excluding volatile food and energy costs, wholesale prices were unchanged in August, the Labor Department said Friday.

• U.S. businesses restocked their shelves and warehouses in July at the fastest pace since January as their sales rose. Business stockpiles increased 0.4 percent in July from June, the Commerce Department said Friday. Total business sales rose 0.6 percent in July, up from just 0.2 percent in June.

• Consumer confidence tumbled this month to its lowest level since April amid rising interest rates and sluggish job creation. The preliminary September consumer sentiment reading Friday from the University of Michigan and Thomson Reuters fell to 76.8 from August's final figure of 82.1.

Caution creeps into consumer spending 09/13/13 [Last modified: Friday, September 13, 2013 7:01pm]
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