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Wednesday 07th of January 2009
July 14, 2005

US economic indicators good on consumer spending


by Brian Turner
US economic indicators good on consumer spending

The US economy got two bits of good news on Thursday as new data showed that retail sales were up and inflation remained in check.

The consumer spending figure is especially important since it accounts for around 70 percent of all US economic activity and is thus an important indicator of the economy’s health.

According to the Department of Commerce, retail sales grew by 1.7 percent in in June, above the 0.9 percent forecast by Wall Street.

Some analysts believe that the sharp increase was due to discounts on clothes and cars, combined with good weather and a cut in the unemployment rate.

Sales were up 0.7 if auto sales are excluded from the data.

In normal circumstances, the Federal Reserve could express concerns if retail sales go up too much, but the Labor Department’s consumer price index showed that inflation was flat in June, when growth of 0.3 percent had been expected.

The core rate of inflation, which excludes food and energy prices, grew at a very small 0.1 percent.

It is possible that this low growth in the inflation rate could cause the Federal Reserve to think before increasing short-term interest rates again, according to some analysts.

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