Retail sales jumped 1.1 percent last month, producing the best two months of sales in two years, according to figures released Monday by the Commerce Department.
“The consumer is back,” said Joel Naroff, chief economist at Naroff Economic Advisors. “They are not spending money like it is going out of style, but they are spending at a more normal pace that is consistent with a moderately growing economy.”
The spike in spending could boost sluggish growth and help revitalize President Barack Obama’s campaign after a strong debate performance by challenger Mitt Romney.
The increase comes only 10 days after a report that unemployment fell to its lowest level since Obama took office. And it follows a survey last week by the University of Michigan that showed consumer confidence rose in early October to a five-year high.
Stocks climbed after the retail report. The Dow Jones industrial average gained 95 points to close up at 13,424. Broader indexes also rose.
Businesses appeared to be banking on a resurgent consumer.
A second Commerce Department report Monday showed companies increased their stockpiles in August by 0.6 percent after a slightly larger gain in July. Companies typically step up restocking when they anticipate sales will rise in coming months.
The retail sales report is the government’s first monthly look at consumer spending. Consumer spending is critical because it drives nearly 70 percent of economic activity.