Consumer spending up, but recovery still shaky - 13 WTHR Indianapolis

Consumer spending up, but recovery still shaky

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Rich Van Wyk/Eyewitness News

Indianapolis - Consumers put up some impressive numbers last month as retail sales scored the biggest one-month gain in years. In Central Indiana, economic experts say it's a good sign, but not necessarily a sign that the economy is recovering.

Jessica Limberry is a wedding photographer. Business is good.

"People have put a lot more money into those events, making sure their family and friends are having a good time," she said.

Consumers had a good time in August. Retail sales jumped 2.7 percent, the biggest monthly increase in three years. Auto sales, helped by the government's Cash for Clunkers incentives, jumped more than ten percent. Even excluding autos, typical consumer spending increased almost three times more than experts predicted.

"It's certainly good news," said Bill Rieber with Butler University's College of Business. But he is cautious. "The economy is improving, but still not doing well."

Consumers account for two-thirds of the nation's economic activity and most are holding on to their money.

"You never know what could take place at any given time," said Rasheeda Hague, who was out shopping Tuesday.

Nationwide, unemployment is increasing, manufacturing and other key industries aren't hiring until they see a sustained demand for their products. Although sales were up in August, they fell slightly in July.

Consumers spending more money consistently would push the auto, housing and financial industries closer to recovery.

"If those numbers keep improving, employers will be much more willing to hire people back and provide new job opportunities," said Bill Rieber.

It will likely take several consecutive months of increased consumer spending to convince employers to begin getting back to business.

Indiana's August unemployment figures come out Friday. With the nation's unemployment expected to top 10 percent and with incomes falling, analysts wonder whether Americans will have the ability or confidence to keep spending and pushing the economy towards a recovery.

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