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Just off of some upbeat news on the consumer sentiment front issued late last week, the U.S. Commerce Department provided some additional good news for the economic bulls earlier this morning when it reported that retail sales had surged during September, rising by an outsized 1.1% during the month. That was well above the consensus expectation of a gain of 0.7%.

What's more, the data for August were revised upward from an increase of 0.9% to an advance of 1.2%. Also, if we exclude autos from the aggregate mix, as these products are very high priced and can skew the overall result materially, the so-called core rate of retail sales rose by the same 1.1% last month. That, too, was ahead of expectations for a core retail sales gain of just 0.6% during the month.

Helping the result last month were healthy advances in sales of furniture and home furnishings, electronics and appliances, food and beverages, clothing and accessories, sporting goods, sales over the Internet, and gasoline sales. This latter category, of course, was boosted noticeably by the ominously higher cost of a gallon of gas, as all drivers are aware.

About the only area of concern was weaker sales at the nation's department stores. That pullback, which was a modest 0.2%, last month, was largely as expected given the listless showing among the nation's retail chains. These stores had released their comparable store sales reports some 10 days ago.

Taken as a whole, this report was most encouraging and quite reassuring, as it suggested that the consumer is back in business, a trend that was obvious from the upbeat report issued on Friday morning by the University of Michigan, which issued its semi-monthly sentiment survey showing the highest rate of consumer optimism in the past five years. This solid September retail showing, coupled with the upward sales revision for August, now suggests that third-quarter GDP growth may have topped our expectation of 1.5%. If that is the case, and the current consumer trends continue, the coming GDP expansions could quicken a bit further during the final three months of this year and the early part of 2013.      

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.