Higher spending should lift the economy’s growth to a solid 3% annual rate in the July-September quarter, economists forecast, after a sluggish 1.6% expansion in the first half of the year.
Much of the spending, however, was driven by rising prices at gas stations and grocery stores. Still, sales rose 0.7% in September at restaurants and bars, a healthy gain in discretionary spending. Sales at clothing, electronics, and sporting goods stores fell.
Tuesday’s report comes before the crucial winter holiday season kicks off this weekend, when retailers earn as much as a fifth of their revenues. The National Retail Federation and other forecasters expect modest sales gains this year, compared with last year’s holiday, with the NRF projecting that sales will top $1 trillion for the first time.
Separate figures from the Labor Department suggest that inflation remains elevated but isn't accelerating, which could make it more likely that a closely-divided Federal Reserve cuts rates next month.
