American consumer comes to the rescue

 
Julian Harris
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THE AMERICAN consumer sprang to life in September, boosting US retail sales and suggesting that the country’s economic recovery could be sustained.

Sales were up 1.1 per cent last month, the Census Bureau said – a 5.4 per cent improvement on the same time last year.

Separate data measuring the factory activity in New York state revealed a third straight month of decline, yet the rate of contraction eased considerably.

The widely-regarded Empire State Manufacturing Survey showed general business conditions rising by four points to an index score of -6.2.

Despite the sales figures appearing to reflect improving domestic demand, the global economic slowdown continues to hit US factories, Capital Economics said in a note.

American GDP for the third quarter should be relatively positive, however. “It now seems likely that third-quarter annualised GDP growth was closer to two per cent than our previous estimate of 1.5 per cent,” Capital said.

With presidential elections set for 6 November, incumbent Barack Obama will be hoping that bullish economic news assists his hopes of being re-elected.

Meanwhile the Federal Reserve is continuing with its efforts to stimulate the US economy, after revealing its third spell of quantitative easing (QE3) last month.

An influential Fed official, William Dudley, said yesterday that it will not react to strong economic news “in a hasty manner” by reversing its ultra-accommodative policy stance.