Washington – Consumers went shopping for clothes and furniture last month, helping to calm fears that a key segment of the economy might be faltering.
Retail sales rose 0.3 percent in July, the Commerce Department said Monday in a report that showed strength in a wide array of areas outside of autos.
The rebound came after a 0.7 percent decline in June, the sharpest decline in 16 months. It was originally reported as a 0.9 percent fall and had raised concerns that soaring gasoline prices and a slumping housing market were beginning to take their toll on consumer spending, which is closely watched by economists because it accounts for two-thirds of the total economy.
But analysts took heart from the July rebound.
“Consumers are holding tough,” said Mark Zandi, chief economist at Moody’s Economy . “They are surprisingly resilient in the face of near- record-high gasoline prices and the unraveling housing market.”
Zandi and other analysts said that as long as consumer spending continues to show gains, it will lessen concerns that the economy could lapse into a recession caused by the worst housing downturn in 16 years and recent turmoil in financial markets caused by spreading problems in credit markets.
Also, the Commerce Department said businesses built up their inventories by 0.4 percent in June, in line with expectations.
The gain supported the view that inventory rebuilding will help support economic growth in the second half of this year and offset weakness in such areas as housing.
