The United States Department of Commerce announced Monday that retail sales saw the highest climb in close to two years. The respective gains suggested that household spending assisted in the economic growth in the last quarter.
According to census data published by the Commerce Department, retail and food services for September totaled $412.9 billion, which is up 1.1 percent from the month prior. August’s increase was adjusted to 1.2 percent and the September figure is also 5.4 percent higher than a year ago.
Sales increased in most major sectors. Electronic goods saw a 4.5 percent spike last month and a lot of analysts are attributing this jump to Apple when it released its latest iPhone device. Car sales saw a 1.3 percent increase and petrol sales increased 2.5 percent in part to higher prices.
Meanwhile, in other sectors, clothing sales swelled 2.5 percent and furniture store sales rose 3.1 percent. Sporting goods, hobby, music and book store sales had one of the most significant gains of 4.9 percent
Overall, excluding building, car and petrol sales, the nucleus of retail sales rose 0.9 percent, which is actually higher than what most experts projected. Despite the weak recovery, U.S. officials and business analysts are suggesting that Monday’s figures as well as last week’s unemployment numbers are signs that economic growth is picking up.
Debt still a problem
Despite the positive retail numbers, household debt remains to be a troubling issue for many Americans. According to the latest Federal Reserve data that was published last month, households increased their borrowing by the most since the second quarter of 2008.
The Federal Reserve noted that household debt increased $39.4 billion to $13 trillion in the second quarter of 2012, which is only $2 trillion away from the nation’s annual economic productivity.
Furthermore, household wealth dropped $322 billion down to $62.7 trillion, while median incomes have also fallen 1.5 percent to just over $50,000. This is just more evidence that households still maintain a difficult time attempting to rebuild their value.
Nevertheless, surveys and economists say households are expected to see a rebound.
“Net worth will likely get a boost from increases in house prices and equity prices in the third quarter,” said Daniel Silver, an economist at JPMorgan in New York, in an interview with Reuters.
Americans think otherwise, though. A Bloomberg survey in August found that views on the economy are at their lowest since the end of 2011.
Even with tremendous amounts of debt inflicting the U.S. government and consumers and the paucity of real growth, inflation is the No. 1 concern for most Americans, according to a Fox News Presidential Poll, which suggests voters are more worried about inflation than unemployment and the housing market.
Peter Schiff, CEO and President of Euro Pacific Capital, told CNBC last week that the growth in the market comes from inflation. He has also forewarned numerous times on Fox, CNBC and CNN that the U.S. needs to start producing, stop spending and increase their savings.
“It’s going to be obvious to a lot of people that we can’t afford to service the debt let alone retire it, and our creditors are going to run and that’s when the real crisis is going to come,” said Schiff in an interview with Newsmax (via Moneynews.com). “That’s the real fiscal cliff, not, you know, the expiration of the Bush tax cuts or these tiny automatic spending cuts that are due to kick in. The fiscal cliff is when interest goes up and we have a choice between default or runaway inflation.”
Inflation and the $16 trillion national debt have not been key issues in political discourse on the presidential campaign. President Barack Obama and former Massachusetts Governor Mitt Romney have rarely talked about the inflationary issues, including the latest Quantitative Easing measures of the Federal Reserve and its Chairman Ben Bernanke.