In April, sales were up 3.1 percent from April 2000. So far in 2001, sales are up 2.5 percent from 2000 levels, about flat when adjusted for inflation.
The rise in spending was far greater than the 0.1 percent forecast by economists surveyed by CBS.MarketWatch.com. Some hint of the strength was foretold Thursday when retail chain stores reported their April same-store sales were up 3.8 percent from last year.
The big surprise came in auto sales. Automakers reported last week that their domestic vehicle sales fell to a 16.7 million annual pace in April, down 2.4 percent from March and off 7 percent from a year earlier.
The automakers report their sales by unit volume, while the government figures are measured by sales prices. In addition, the government data include used cars and auto parts.
The Commerce Department said retail sales excluding autos rose 0.7 percent, compared with the 0.4 percent gain forecast by the Street.
The retail sales report strengthens the hand of those who believe the economy will avoid a recession, despite the plunge in capital spending and the recent rise in unemployment.
Before the report, analysts and futures markets were nearly certain that the Federal Reserve would cut an additional half percentage point from the Federal funds rate at the policy meeting next Tuesday.
The Fed has already sliced 2 full percentage points from the overnight rate, bringing it from 6.5 percent to 4.5 percent. The Street was expecting the rate to fall to 3.5 percent by the end of summer.
Elsewhere in the sales report, Commerce said sales of building supply and hardware stores rose 1.5 percent and sales at furniture stores fell 0.5 percent.