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Retail Sales Slow, GDP Soars

By John S. McClenahen As recently as a week ago, economists who were keeping to their forecasts of GDP growth at an annual rate greater than 5% during the third quarter were being met with a certain amount of derision. It now looks, however, that the GDP bulls may be proven right. Although retail sales declined 0.2% in September, more than expected, the U.S. Commerce Department has revised upward to 1.2% the August gain first reported at 0.7%. And exclude the 1.9% fall in auto sales in September and last month's retail sales show a 0.3% gain. David A. Rosenberg, chief North American economist at Merrill Lynch & Co., New York, figures that consumer spending grew at a 7% rate from July through September, its fastest pace it 15 years. Last week, Merrill raised its third-quarter GDP estimate to about 5% (based on new trade data). Now, Rosenberg says that "6% growth is not out of the realm of possibility." Consumer spending accounts for about two-thirds of U.S. GDP. The Commerce Department is slated to issue its first report on third-quarter GDP on Oct. 30.

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