WASHINGTON (Bloomberg) -- U.S. retail sales grew at a subdued pace
last month because of low prices and sluggish business at auto
dealers. Still, there are few indications consumer spending is about
August sales rose 0.2 percent -- less than the 0.5 percent
expected gain -- after declining 0.6 percent in July, Commerce
Department figures showed Tuesday. When autos are excluded, retail
sales rose 0.3 percent last month after rising 0.6 percent in July.
That suggests there's "no falling off a cliff," said John Ryding,
a senior economist at Bear Stearns in New York, as job and income
growth keep consumers spending, if at a slower pace than earlier in
Third quarter consumer spending will probably cool to a 2 percent
annual growth rate, about a third of the 5.9 percent pace recorded
during the prior three months, said Christopher Low, chief economist
at First Tennessee Capital Markets in New York.
One sign spending could slow is a drop in consumer confidence,
which has been tempered by the recent drop in U.S. stock prices and
by turmoil in the global economy. The Conference Board reported that
its index gauging consumer expectations for the next six months fell
in August for a second straight month.
Many retailers have reported vigorous sales this year.
"Pier 1 Imports continues to benefit from a strong U.S. economy,"
said Marvin J. Girouard, president and chief executive officer of the
North America's largest specialty retailer of imported decorative
home furnishings. Second quarter sales at the company rose 9.1
percent from the same three months last year.
At Best Buy, the biggest U.S. electronics retailer, second quarter
earnings doubled forecasts because of strong sales of televisions,
camcorders and entertainment software, the company said Sept. 3.
Total sales at Best Buy's 289 stores rose 22 percent to $2.2 billion.
Consumers were "feeling pretty confident of where they are in the
nation's economy. Both with strong employment, with real wage growth
and low inflation, consumers are spending money for our kinds of
products," said Richard Schulze, chief executive officer at Best Buy,
in an interview.
So far this year, shares of Best Buy are up a whopping 181
percent. And the Standard & Poor's retail stores composite index, a
gauge of the performance of 36 retail companies listed in the S&P
500, has gained more than 18 percent so far this year.
That compares with a 6.6 percent rise in the broader S&P index.
The strength of the retail index, which includes such companies as
Home Depot, Circuit City, Sears Roebuck and Wal-Mart, is a reflection
of the consumer appetite for goods that has characterized the economy
At the same time, companies have had difficulty raising prices on
the merchandise they sell as the cost of imported goods keeps
declining and because consumers simply take their business elsewhere. …