Retail sales have been pulling the U.S. economy upward for most of the past year and that isn’t about to change soon.

Weak auto sales could pull down the overall retail sales figure to flat or even into negative territory when September figures are reported on Wednesday, but economists believe that will be more than offset by continued robust spending on clothes and other products.

“We’re looking for an ex-auto figure of up about 0.5 percent,” said Tim O’Neill, chief economist for Harris Bank/Bank of Montreal.

But O’Neill said most of his colleagues are keeping a close eye on spending habits. “The issue is what happens after the initial spending impulse from the tax cut is no longer there,” he said.

Hopes for a rebound in the nation’s manufacturing and a long-awaited resumption in hiring get another boost this week.

Industrial production figures are expected again to be in positive territory. While not as strong as the 0.7 percent increase recorded in July, most experts are predicting that it will be stronger than the 0.1 percent increase recorded in August.

Look forward to a better score on industrial production for September as low inventories seem to be spurring higher orders and output, said Lynn Reaser, chief economist for Banc of America Capital Management. Many economists expect industrial production will rise by about 0.4 percent.

An increase of that magnitude could allow manufacturers to begin planning for expanding production later this year rather than cutting production as they have since the start of the recession. According to the government, 85 percent of the nation’s job losses have occurred in the manufacturing sector.

Consumers have enjoyed nearly three years of stable or, in some cases, declining prices. That isn’t soon going to change.

O’Neill says the government likely will report prices rose about 2.1 percent in September, down slightly from the 2.2 percent increase recorded in August.

“Inflation data is showing no pattern of concern either on the upside nor on the downside,” he said. “The deflation fear seems to have gone out of the market.”

Housing continues to outperform most other sectors. That’s not likely to abate the rest of this year.

While housing starts grew at a robust annualized rate of 1.82 million units, it is expected to creep higher still.

O’Neill says he wouldn’t be surprised to see that September starts have risen to 1.85 million units. Others are a little more cautious, saying they only anticipate a smaller move to 1.83 million units.

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(c) 2003, Chicago Tribune.

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AP-NY-10-10-03 1946EDT