WASHINGTON (AP) — Americans stepped up their purchases at retailers last month as low unemployment, steady pay gains and rising stock and home values helped sustain their willingness to spend despite higher prices.
Retail sales rose 0.4% from August to September, the Commerce Department said Thursday, up from 0.1% the previous month and the third straight increase. Online retailers, restaurants, and grocery stores all reported higher sales.
Sales at gas stations fell, because of lower pump prices. The retail sales figures aren't adjusted for inflation, and the prices of goods fell slightly last month.
With the presidential election in its final weeks, Thursday's figures provided the latest sign that household spending is fueling a steady economic expansion even while inflation has cooled. In his campaign for the White House, Donald Trump has insisted that sweeping new tariffs on all imports and lower corporate taxes are needed to deliver healthy growth. Vice President Kamala Harris has countered with proposals for expanding tax credits for families with children and subsidizing home construction to try to lower housing costs.
Clothing stores, department stores and sporting goods outlets all reported higher retail sales last month. Purchases dropped at electronics and furniture sellers.
The government has reported that consumer prices rose just 2.4% in September from a year earlier, down from a peak inflation rate of 9.1% in June 2022 and barely above the Federal Reserve's 2% target. With prices coming under control, the Fed cut its benchmark interest rate last month for the first time in four years by a larger-than-usual half-point. By year's end, economists expect two additional Fed rate cuts, of smaller quarter-point increments, which should help ease borrowing costs over time.
Many analysts say they think cooler inflation and lower borrowing rates will help support the economy in the coming months. Last quarter, the economy grew at a solid 3% annual rate.
Christopher Rugaber And Anne D'innocenzio, The Associated Press