That consumers are spending is an encouraging sign, but that they are doing so hesitantly is something retailers and economists will be watching closely. Consumer spending accounts for 70 percent of economic activity. And while only a small group of merchants, representing roughly 13 percent of the $2.4 trillion U.S. retail industry, report monthly revenue figures, the August numbers still offer a glimpse at how Americans are spending.
The revenue gains in August, which factor in only stores open at least a year, are better than the 4 to 5 percent increase Wall Street had predicted at the beginning of the month. And it was the industry's best performance since March, when stores collectively posted a gain of 6.8 percent. Except for a lull in June, stores have seen a healthy pace of 4 percent to nearly 7 percent growth since the beginning of the year. But analysts worry that the healthy spending won't last.
Stores certainly benefited from people shopping for supplies and clothes for back-to-school, the second-biggest shopping period of the year. Many department and clothing stores, such as Macy's Inc. and Gap Inc., had better than expected results as trendy fashions such as brightly colored jeans caught shoppers' attention.
Gap, which filled its stores with fashions in hot pinks and aqua greens, posted a 9 percent gain as back-to-school shoppers headed into its chains, particularly Old Navy. The results niftily beat analysts' expectations of a 5.4 percent rise.
Target also reported better than expected results. It had a 4.2 percent gain in August, better than the 3.1 percent increase Wall Street had expected. Business was strongest in food and health and beauty items, but shoppers also bought clothing and home furnishings, the discounter said.
Macy's 5.1 percent gain also was better than the 3.6 percent forecast. The company said its men's apparel, home furnishings, beauty products, women's shoes, and handbags continue to perform well.
"Our fall season is off to a healthy start," said Macy's chief executive Terry J. Lundgren.
