Retail sales exceed forecasts despite sinking consumer sentiments

Economic Growth Forecast - The Federal Reserve Bank of Atlanta upgraded its economic growth forecast by 0.3 percentage points, predicting a 3.4% annualized gain in GDP during Q3 [3] Consumer Spending Trends - Consumer spending, which accounts for approximately 70% of economic growth, has remained steady despite rising price pressures, a slowdown in hiring, and an increase in unemployment to 4.3% [3] - Spending surged early in the year due to consumers anticipating price increases from high U.S. tariffs, but this trend has waned since May, leading to a modest slowdown in spending [4] Retail Sales Performance - Retail sales exceeded forecasts in August, rising by 0.6% for the third consecutive month, despite job market weaknesses and declining consumer sentiment [7] - Nine out of 13 categories of goods saw gains, with e-commerce sales increasing by 2% and sales at clothing stores and sporting goods shops rising by 1% and 0.8%, respectively [7] Impact of Tariffs - Import taxes have negatively impacted sales, particularly in categories vulnerable to tariffs, such as sports equipment, electronics, and clothing [5] - One in four small businesses reported that tariffs and rising costs have led them to increase prices, indicating consumer anxiety regarding import taxes fueling price gains [6]