Retail sales

The report is the government's first read on consumer spending for the July-September quarter. Consumer spending is always closely watched because it accounts for 70% of economic growth. In June, consumers cut spending for the first time in 20 months.



Retail sales, which don't include spending on services, have been slowing since February. They grew only 0.1% in June, and excluding car sales, retail spending was flat.

Back-to-school promotions helped boost sales in July at large chain stores. Retail sales in July posted their biggest gain since March, tempering fears that the world's largest economy might be slipping back into recession.

There was a stronger than previously anticipated increase in retail sales. We saw from earlier data that auto sales were strong and chain store sales were stronger."



"We've seen a few months of consumer spending accelerating. PAUL BALLEW, CHIEF ECONOMIST, NATIONWIDE, COLUMBUS, OHIO

"It's hesitant consumer spending growth. "I don't see this as a deceleration in consumer spending. July's data saw gasoline price gains inflate the nominal data, but June's fall in gasoline prices does appear to have given the consumer some support."

MARKET REACTION

STOCKS: U.S. stock index futures add to gains.