Consumers tapped brakes on spending in October

WASHINGTON -- Consumers showed greater caution in October as rising prices for food and energy and a further slowdown in the housing market led them to cut back on their spending in some parts of the economy, according to a report out Wednesday.

The data provided further evidence that consumers, while not slamming on the brakes, are not in a shop-till-you-drop mood heading into the holidays.

"I don't think it will be a rip-roaring-boom-type of Christmas season, but I don't think it will be bad," John Hancock Financial Services chief economist Bill Cheney says.

Retail sales rose 0.2% in October — after a 0.7% gain in September — the smallest rise since August, the Commerce Department said.

The gain was led by large increases in spending at gas stations, grocery stores and restaurants, reflecting at least in part higher prices. The sales figures are measured in dollars, not volume.

Sales at car dealers and building- and garden-supply stores also gained. But noticeable drops were seen at furniture retailers, department stores and online retailers. Sales at sporting goods, book and music stores also lost ground.

"You definitely see a pattern of slowing (spending) growth, but nothing that looks alarming, nothing that looks like the economy has hit the wall and is tipping into recession," Comerica Bank chief economist Dana Johnson says.

Keith Hembre, chief economist at First American Funds, notes the consumer is facing a number of headwinds. Gasoline prices have surged, home prices are falling in many areas and there are signs that job growth is slowing.

Economists keep a close eye on consumer spending because it accounts for more than two-thirds of U.S. economic activity.

In other economic news:

•The price of a barrel of light, sweet crude oil for delivery in December rose $2.92, or 3.2%, to $94.09 after a large drop on Tuesday. Prices have been volatile in recent days in part because of conflicting statements from OPEC members about the prospects for increased production.