Retail sales, led by strong auto sales, post record surge in October.
NEW YORK (CNN/Money) - Retail sales posted the biggest jump on record in the United States last month, the government said Wednesday, as consumers flocked to car dealers offering no-interest loans in a bid to boost business after the Sept. 11 attacks.
The Commerce Department said retail sales jumped 7.1 percent in October to a seasonally adjusted $306.8 billion, the biggest increase for any month on record, after falling 2.2 percent in September. Economists surveyed by Briefing.com expected sales to rise 2.5 percent.
Excluding automobile sales, retail sales rose 1.0 percent after falling a revised 1.5 percent in September. Auto sales got a big boost from automakers' zero-percent financing incentives last month.
To keep consumers spending and fend off a recession, the Federal Reserve has cut interest rates a record-tying 10 times this year, three since the terror attacks.
Bond prices fell after the numbers, as traders worried the good news could mean the Fed is through making cuts, but stock futures extended their gains, pointing to a higher start on Wall Street.
"The headline number is absolutely kind of a shock, I think the bond market is probably overreacting," Bill Cheney, chief economist at John Hancock Financial Services, told CNNfn's Before Hours program. "It's a bounce back from September, but we're still not gaining back all the ground lost in September. The underlying trend is still kind of down."
The vast bulk of the sales gain came from record auto sales, spurred by aggressive dealer incentives, including zero-interest financing.
Still, some observers noted that consumers' willingness to take advantage of such deals means they may have been more resilient than first thought.
"People told consumer surveys they were miserable, but they were willing to borrow money to pursue a bargain," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. |
