The Free Press, Mankato, MN

State, national news

May 13, 2013

US retail sales rise in April on cars, clothing

(Continued)

But most of the increase came from greater spending at the start of the quarter. Consumers cut back sharply on retail spending in March, while paying more for utilities to heat their homes during a colder-than-usual month.

Some economists had worried that the weak month of spending in March was a sign that the tax increase was starting to catch up with the consumer.

But other factors appear to have made the consumer more resilient.

Chris G. Christopher Jr., director of consumer economics at IHS Global Economics, said that falling gas prices and an improving job market have cushioned some of the impact of the higher Social Security taxes.

The economy added 165,000 jobs in April and has created an average of 208,000 jobs a month since November. That's well above the monthly average of 138,000 for the previous six months.

Cheaper gas is leaving consumers with more disposable income. The national average price has risen slightly over the past week to $3.58 a gallon. But it is still 21 cents lower than the peak price reached on Feb. 27.

And a surging stock market and increases in home prices may be making consumers feel wealthier and more inclined to spend.

Most economists still expect growth to weaken slightly in the April-June quarter. But after seeing the more upbeat retail sales figures for April, some are raising their forecasts. Analysts at JPMorgan now predict growth will slow to a 2 percent rate, up from their previous forecast of 1.5 percent.

And many expect economic growth will strengthen in the second half of the year.

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