Retail sales rose in July for a fourth consecutive month, showing the U.S. economy is breaking free of the effects of higher taxes and federal budget cuts.
The 0.2% increase followed a 0.6% gain in June that was larger than previously reported, according to Commerce Department figures issued today in Washington. The median forecast of 81 economists surveyed by Bloomberg called for a 0.3% advance. The measure of demand that feeds into gross domestic product climbed by the most this year.
Employment gains and rising household wealth tied to higher home values and stock prices are giving Americans the confidence to spend, triggering improving sales at companies such as Michael Kors Holdings Ltd. The pickup in household purchases would help counter the fiscal headwinds of taxes and government cutbacks that have held back the world’s largest economy.
“Consumers are still able to go out there and spend despite headwinds from tax increases and the sequester,” said Omair Sharif, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, which accurately forecast the growth in retail sales. “Job growth is continuing at a moderate clip and we’re making gradual headway.”
U.S. stocks were little changed, after the Standard & Poor’s 500 Index recorded two days of losses. The S&P 500 added 0.02% to 1,689.84 at 9:42 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 2.7% from 2.62% late yesterday.
Estimates in the Bloomberg survey ranged from a drop of 0.1% to a 0.8% gain. The reading for June was revised from an initially reported 0.4% increase.
Nine of 13 major categories showed gains last month, led by clothing and general merchandise stores.
Purchases excluding autos, gasoline and building materials, which render the figures used to calculate GDP, advanced 0.5% last month, the most since December, after increases of 0.1% in each of the previous two months.
Spending advanced 0.9% at clothing chains and 0.4% at general merchandise stores, today’s report showed.