Rising gas prices, car sales boost retail sales

US retail sales rise as gas prices go up and consumers buy more cars. But consumers wary about other purchases.

Sue Ogrocki/AP/File
A Shell gas station advertises regular gas prices at 3.899 in Oklahoma City, Okla., last month. Rising gas prices and a boost in car sales caused consumer spending to go up in August.

U.S. retail sales rose in August because consumers paid higher gas prices and bought more cars and trucks. They were more cautious elsewhere, suggesting the weak economy has made many selective about spending.

Retail sales increased a seasonally adjusted 0.9 percent from July, the Commerce Department said Friday. Gas station sales jumped 5.5 percent, the most in nearly three years and a reflection of sharp price increases. Demand for autos increased 1.7 percent.

Outside those categories, sales rose only 0.1 percent. That's below July's 0.8 percent gain. Sales at general merchandise, clothing and electronic stores fell. Sales at grocery stores, sporting goods stores and online retailers were unchanged.

The retail sales report is the government's first look each month at consumer spending, which drives roughly 70 percent of economic activity. Consumer spending has increased at a slow pace this year. That has dragged on the economy and kept businesses from hiring.

Gasoline sales are heavily influenced by price, and auto sales represent major purchases. Excluding those categories offers more clarity on consumers' willingness to spend.

"This has to go down as a weak report," said Paul Dales, senior U.S. economist at Capital Economics. "Most of the spending in August was on products that households have to buy, such as gasoline, not items they like to buy, such as new TVs."

Higher gas costs also drove up consumer prices by the most in three years, the Labor Department said in a separate report. But excluding energy prices, inflation was mild.

Consumer prices rose 0.6 percent in August, the department said. Gas prices increased 9 percent and accounted for 80 percent of the increase. Outside food and energy, prices rose only 0.1 percent.

Overall consumer prices have increased 1.7 percent in past year. That's well below the Federal Reserve's inflation target.

Lower inflation will allow the Fed to stick with programs announced Thursday aimed at lifting the economy. If the central bank is worried that prices are rising too fast, it might have to raise interest rates.

On Thursday, the Federal Reserve said it would buy $40 billion of mortgage-backed securities a month until the economy and job market show signs of steady improvement. Fed officials also said they would keep short-term interest rates low, even after the acceleration of any economic recovery.

Rising gas prices could make consumers more cautious about spending in the coming months. Gas pricesaveraged $3.87 a gallon (3.7 liters) nationwide on Friday, 16 cents higher than a month ago and just 7 cents below the 2012 average high.

Automakers earlier this month reported the best sales in three years, after seeing rising demand for pickup trucks.

The government's retail sales data contrasted with reports from the nation's largest retail chains. Many said things picked up in August, driven partly by back-to-school purchases. Sales at 18 retail chains rose last month by the most since March.

Employers added only 96,000 jobs last month, below the 141,000 added in July and far below the average gains of 226,000 in the first three months of the year.

The unemployment rate fell to 8.1 percent from 8.3 percent, but only because the number of people in the work force shrank.

The economy is growing too slowly to spur greater job gains. The economy expanded at a 1.7 percent annual pace in the April-June quarter. That's down from 2 percent in the first quarter and 4.1 percent in the final three months of last year.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.