The Commerce Department reported today that retail sales in October increased more than expected, increasing 0.4 percent from the previous month, the largest increase in 3 months, and beating estimates of 0.3 percent, according to briefing.com.
Subtracting auto and gas sales, there was a gain of 0.2 percent in October after expanding 0.3 percent in September when gas prices were higher.
Electronics sales rose by the most since April and auto sales expanded 1.3 percent.
The stronger than expected retail report reveals the 16-day partial shutdown of the federal government in October had less of an impact on retail sales than many economists had estimated.
Fed Chairman Ben Bernanke spoke on Tuesday before the National Economists Club and addressed the issue of short-term interest rates.
The target for the federal funds rate was reduced in 2008 to a range of zero to 1/4 percent so long as unemployment remained above 6.5 percent and inflation expectations remained stable and near target.
However, Bernanke said yesterday that “the conditions stated in this guidance are thresholds, not triggers.”
“Crossing one of the thresholds will not automatically give rise to an increase in the federal funds rate target; instead, it will signal only that it is appropriate for the Committee to begin considering whether an increase in the target is warranted” Bernanke added.
Bernanke spoke briefly about the Fed’s quantitative easing program of $85 billion in asset purchases, telling the audience “asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook.”
“As before, the Committee will also continue to take into account its assessment of the likely efficacy and costs of the program” Bernanke said.
Later this morning, investors will digest minutes from the Fed’s last policy meeting in October that could offer some clues about how Committee members approached the topic of tapering in light of their outlook for the economy.