Economy Watch: Consumers Rein in Spending in September

By Dees Stribling, Contributing Editor

The Census Bureau reported on Wednesday that U.S. retail sales came in at $442.7 billion in September, a drop of 0.3 percent compared with August. Compared with the same month in 2013, however, sales were up by 4.3 percent. Total sales in the third quarter of 2014 were up 4.5 percent from the same quarter in 2013.

Only a few categories of retail sales experienced a noticeable uptick month-over-month: electronics, up 3.4 percent compared with August, and up 5.8 percent since August 2013; and food service and drinking places, by 0.6 percent for the month and 7.1 percent for the year. Food and beverage stores, along with department stores, didn’t see sales change at all month-over-month, and every other category fell.

Among the biggest losers for the month, surprisingly, were auto dealers, who experienced a 0.8 percent drop in sales, though have enjoyed an increase of 9.5 percent since last year. Furniture stores also saw a 0.8 percent drop for the month, but things haven’t really been shipshape for that kind of retail in a long time. Since last year, furniture sales have only gained 0.3 percent. Gas station sales likewise dropped (0.8 percent for the month, 2.5 percent for the year), but that reflects the declining price of gas, which the bureau doesn’t adjust for.

Growth still moderate or modest, says the Beige Book

The latest Beige Book from the Federal Reserve, which was released on Wednesday, was a touch anticlimactic, since the reports from the 12 Federal Reserve districts generally described “modest to moderate economic growth at a pace similar to that noted in the previous Beige Book.” The some districts reported moderate growth, while the others reported modest growth, and one (Boston) said it was a “mixed picture” of economic conditions.

Employment also continued to expand at about the same pace as reported in the previous Beige Book, the current book said. Most districts reported that some employers had difficulty finding qualified workers for certain positions, and a number of districts characterized overall wage growth as modest, but reported upward wage pressures for particular industries and occupations, such as skilled labor in construction and manufacturing.

Reports on residential construction and real estate activity were also mixed, with single-family construction sluggish in some areas, but multifamily increasing in a number of places. Commercial construction and real estate activity grew in most districts. Richmond, St. Louis, and San Francisco reported increasing commercial construction, as did Atlanta and Chicago. The New York District noted that the New York City office market continued to strengthen, and Boston noted that commercial real estate fundamentals are either holding steady or improving.

Wall Street started dropping again on Wednesday, with the Dow Jones Industrial Average off 173.45 points, or 1.06 percent. The S&P 500 declined 0.81 percent and the Nasdaq was down 0.28 percent. At one point during the trading day, all of the indexes were down around 3 percent, but they bounced back.