The Ottumwa Courier

AP National

November 21, 2013

Solid Oct. retail sales lift hopes for US economy

WASHINGTON (AP) — An increase in shopping last month during the partial government shutdown suggests that the U.S. economy may be more resilient than some have feared.

Retail sales rose 0.4 percent in October, the Commerce Department said Wednesday, after being flat the previous month. The increase showed that many consumers remain willing to spend as the all-important holiday shopping season nears.

At the same time, other data released Wednesday point to an economy that's still struggling to reach full health:

— Sales of existing homes fell 3.2 percent last month from September, the National Association of Realtors said. Higher mortgage rates and a shortage of homes on the market contributed to the drop-off. So did delays by potential homebuyers during the government shutdown.

— Businesses boosted their stockpiles 0.6 percent in September, the Commerce Department said. Some economists worry that businesses may slow their stockpiling if consumer demand falters at the end of the year. If that happened, JPMorgan Chase economist Daniel Silver said it could exert a "significant drag on growth."

But the upturn in retail sales last month was a positive surprise. Analysts had speculated that retail sales would be unchanged in October, slowed by the 16-day partial government shutdown and by cheaper gasoline that would mean less money spent at the pump.

Whatever money many consumers saved on gas in October they spent elsewhere. Excluding sales at service stations, retail spending rose 0.5 percent. Sales of furniture, electronics, appliances and clothing all showed solid gains.

Congress likely blunted some of the impact of the shutdown by guaranteeing back pay for 800,000 furloughed federal workers.

"There could be the possibility that all those furloughed workers knew they were going to be paid, so they may have taken the opportunity to take a mini-vacation and go shopping," said Jennifer Lee, senior economist at BMO Capital Markets.

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