WASHINGTON, D.C. — An increase in shopping last month during the partial government shutdown suggests that the U.S. economy may be more resilient than some have feared.
Retail sales increased 0.4 percent in October, the Commerce Department said Wednesday, after being flat the previous month. That jump shows that many consumers remain willing to spend as the all-important holiday shopping season nears.
At the same time, other data released Wednesday point to an economy that’s still struggling to reach full health.
• Sales of existing homes fell 3.2 percent last month from September, the National Association of Realtors said. Higher mortgage rates and a shortage of homes on the market contributed to the drop-off. So did delays by potential homebuyers during the government shutdown.
• Businesses’ inventories increased by 0.6 percent in September, the Commerce Department said. This caused several economists to bump up their growth forecasts for the previous June-September quarter but to downgrade their expectations for the current quarter. JPMorgan Chase economist Daniel Silver called the possible upcoming decline in business stockpiles a “significant drag on growth.”
Analysts had speculated that retail sales would be unchanged in October, slowed by the 16-day partial government shutdown and by cheaper gasoline that would mean less money spent at the pump.
But what many consumers saved on gas they spent on other items. Excluding sales at service stations, retail spending rose 0.5 percent last month. Sales of furniture, electronics, appliances and clothing all showed solid gains.
Congress likely blunted some of the impact of the shutdown by guaranteeing back pay for 800,000 furloughed federal workers.
“There could be the possibility that all those furloughed workers knew they were going to be paid, so they may have taken the opportunity to take a mini-vacation and go shopping,” said Jennifer Lee, senior economist at BMO Capital Markets.