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Retail gross sales grew strongly in September as shoppers present surprising power

Consumers spent much faster than expected in September. Retail sales rose 1.9%, suggesting that the biggest driver of the US economy remains healthy.

Economists polled by Dow Jones expected sales to grow 0.7% from 0.6% in August.

Without cars, the profit was 1.5%, which was also better than the 0.4% estimate.

Apparel and accessories led the way, increasing 11% while sporting goods, music and books increased 5.7%. Electronics and home appliances were the only major sector to be negative, down 1.6% from August.

The markets reacted positively to the news, with Dow futures marking an opening gain of around 126 points.

The report is concerned about the direction of an economy slowed by the Covid-19 pandemic. Consumers account for around two-thirds of economic activity and fell sharply in the second quarter when GDP fell by an unprecedented 31.4%.

However, economists expect that number will change if third-quarter growth is announced at the end of the month. The Atlanta Federal Reserve's GDPNow tracker points to a 35.2% increase. That would be more than double the quarterly growth of at least 1947.

Additionally, concerns are mounting that the fourth quarter could slow significantly as coronavirus cases continue to mount. The holiday shopping season will be key to the momentum the US sees as the calendar transitions into 2021.

The unexpectedly large spike in spending is due to months of historically high savings as consumers declined on fear of Covid-19. The personal savings rate peaked at 33.6% in April and remained at 14.1% in August, the highest prepandemic rate since June 1975.

"The strength of August sales is to be welcomed and consumers, overall, have the resources – in the form of huge increases in savings since the spring – to finance a strong holiday season," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. "The problem is the virus. In the more populous states, cases are only increasing at a modest pace, but we cannot be sure that it will stay that way, and the message from states where cases have risen to very high levels, is that economic activity begins to suffer very quickly. "

A decline in electronics sales could be seen as a harbinger of a slowdown. The total for September 2020 was also a 6.4% decrease from the previous year.

Food and beverages sales were flat over the month, while furniture sales rose 0.6%.

Motor vehicle sales were a clear strength point, increasing by 3.6% from the previous month and by 10.9% from September 2019. Used car and truck prices rose 6.9%, the largest monthly increase since February 1969.

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