Retail Sales Up Most in Three Years

Washington, DC, Sept. 15, 2009--U.S. retail sales rose 2.7% in August, the biggest increase in more than three years, boosted by government subsidies for cars, higher gas prices and busy crowds at the malls, the Commerce Department estimated Tuesday.

Sales were stronger than the 2.3% expected by economists surveyed by MarketWatch, largely because of widespread sales gains outside the gas stations and the auto lots.

Sales are down 5.3% compared with a year earlier. The figures are adjusted for seasonal differences, but not for price changes.

The strong August sales will boost consumer spending in the third quarter, and probably help the economy grow for the first time in more than a year, economists say. But some worry that the economy remains too dependent on government largesse, including fiscal stimulus and ultra-loose monetary policy.

Consumer spending is likely to be sluggish going forward, with the unemployment rate heading toward 10% and families still struggling to pay off debts accumulated during the bubble years.

Auto sales surged 10.6% in August on the government's cash-for-clunkers program.

Excluding autos, retail sales rose 1.1% in August, the biggest increase since February, and well above the 0.5% expected by economists.

Excluding both autos and gas, retail sales rose 0.6%, the largest increase since February.

Sales of durable goods were mixed. Sales at electronics and appliance stores rose 1.1%. Sales at furniture stores fell 1.6%, and sales at hardware stores fell 1.2%.