Consumers' big purchases lift hopes for economy

WASHINGTON - Americans ramped up spending at retail businesses in November, providing a boost to the economy just in time for the holidays.

But traditional stores didn't benefit as much from the latest burst of spending. Consumers bought more cars, electronics, furniture, and other big-ticket items. They also did more shopping online. Those trends reflect changes in shopping habits and the broader economy.

Total retail sales rose 0.7 percent in November, the Commerce Department said Thursday. It was the biggest gain in five months. Spending at retail businesses rose 0.6 percent in October, higher than previously estimated.

Steady hiring and modest wage gains have boosted consumers' confidence and given them more money to spend. Big increases in stock and home prices have also driven up household wealth. Stock indexes have reached record highs this year, disproportionately benefiting wealthier households.

Those trends are probably pushing up sales of more expensive goods. Auto sales jumped 1.8 percent in November, furniture purchases increased 1.2 percent, and sales at electronics and appliance stores rose 1.1 percent.

"Consumers who have money are spending and spending big," said Diane Swonk, chief economist at Mesirow Financial. "Those who don't aren't."

Sales of everyday items, such as clothes and groceries, fell last month. And sales at sporting-goods outlets and department stores barely rose. That partly reflects steep discounting, as many shoppers still demand bargains before they buy.

But it also suggests Americans cut back on smaller purchases after splurging on cars and other large items. And it reflects shifts in where Americans do their holiday shopping.

"You can see why traditional retailers were squirming," Swonk said.

Many large chains and industry groups have issued gloomy reports on the shopping season. The National Retail Federation estimates that sales during the four-day Thanksgiving weekend dropped 2.9 percent to $57.4 billion compared with last year. That was the first decline in the seven years the group has tracked the data.

And other industry data have shown that, so far, fewer Americans have visited malls and brick-and-mortar stores compared with last year.

But more people are shopping on their computers. In the last year, online sales jumped 9.4 percent. That is double the 4.7 percent increase in total retail sales.

Overall, Americans appear to be spending more, which could give a much-needed boost to the economy in the final three months of the year. Consumer spending rose only 1.4 percent in the July-September quarter, the weakest gain in nearly four years.