Spending at retail businesses rose just 0.2 percent last month, the Commerce Department said Friday. It was the smallest gain in four months. But the government said retail spending was stronger in the previous month than first estimated, revising the July estimate to 0.4 percent from 0.2 percent.
Excluding volatile spending on autos, gas and building supplies, sales in August increased just 0.2 percent, or less than half July’s 0.5 percent gain.
Consumers may be growing more cautious about spending, a trend that could slow economic growth in the July-September quarter. Slow wage growth, modest job gains and higher taxes have limited Americans’ spending power.
Retail sales are watched closely because they’re the government’s first look each month at consumer spending, which accounts for 70 percent of economic activity.
“Consumer spending remained stuck in middle gear in the summer,” said Sal Guatieri, an economist at BMO Capital Markets.
Guatieri forecasts that spending is growing at an annual rate of about 2 percent in the current July-September quarter, about the same as the previous quarter. That suggests economic growth is slowing to an annual rate of about 2 percent, down from the 2.5 percent annual rate that the government estimated for the April-June quarter.
Most economists said the retail sales figures likely are healthy enough for the Federal Reserve to begin cutting back its monthly bond purchases when it meets this week. The Fed is buying $85 billion in Treasury bonds and mortgage-backed securities each month to keep interest rates low and spur more borrowing and spending.
Sales of autos and furniture both jumped 0.9 percent in August. Electronics and appliance sales rose 0.8 percent. But clothing sales dropped 0.8 percent and sporting goods sales also fell.
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