U.S. retail spending jumps despite an increase in taxes

U.S. retail spending rose at the fastest pace in five months in February, even though a tax hike crimped some family budgets.

Wednesday’s Commerce Department report said outside the volatile areas of auto sales and fuel prices, sales in the overall economy advanced four-tenths of a percent for the month. Economists and investors watch retail sales closely because consumer demand drives most U.S. economic activity.

Experts say the improving U.S. job market helped boost sales, as the economy had a net gain of 236,000 jobs and the jobless rate improved slightly.

Other indicators paint a mixed picture of the economy. Freight traffic rose more than 1 percent between December and January, an indication of expansion and growth. But oil futures prices eased somewhat in mid-February as investors worried that slowing growth in China and problems in Europe could hurt demand.

The heads of many major U.S. companies say they expect economic growth to increase slightly during the next six months. Wednesday’s Business Roundtable survey of Chief Executive Officers shows most expect sales and investment to grow, but less than one-third plan to increase hiring.

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