Retails sales in the US economy grew by a rate greater than expected last month which have alleviated concerns of a recession in the economy. The high retail sales have ensured that consumer spending has not fallen to dangerously low levels and that the economy can expect to grow at a decent pace.
The US Commerce Department also published a report on Friday which reduced the worries in the economy, which have been, for the most part, due to the trade war of the country with China and the slowing global economy.
Nonetheless, the Federal Reserve is expected to reduce interest rates on Wednesday.
Chairman of the Federal Reserve said that he was not anticipating a recession in the economy but would still continue to take measures for the expansion of the economy. The US economy has expanded for the 11 years in a row, making it the longest economic expansion in history. The Fed reduced interest rates for the first time since 2008 in July this year.
MUFG’s chief economist, Chris Rupkey, said that the Federal Reserve is not expected to drop interest rates too low as they seem to act early rather than too late in the face of an economic downturn in the global economy.
In August, there was a rise in retail sales by 0.4 percent as sales of motor vehicles, healthcare and building materials. Consumer spending in the second quarter of the year rose by 4.7 percent annualized rate, the highest in 4.5 years. This component of GDP accounts for over two-thirds of the economy.
Economists predict that consumer spending in the economy in the coming quarter would not drop below 4 percent. This is good enough to keep the economy healthy and bolster expansion at a decent pace.