U.S. retail sales increased more than expected in August, pointing to solid consumer spending that should continue to support a moderate pace of economic growth.

The report from the U.S. Commerce Department on Friday could further allay financial market concerns of a recession, which have been fueled by a year-long trade dispute between China and the United States as well as slowing global growth.

Still, the U.S. Federal Reserve is expected to cut interest rates again Wednesday to blunt some of the hit from the trade tensions on the longest economic expansion in history.

Fed Chair Jerome Powell said last week he was not forecasting or expecting a recession, but reiterated the U.S. central bank would continue to act “as appropriate” to keep the expansion, now in its 11th year, on track. The Fed lowered borrowing costs in July for the first time since 2008.

“The winds of recession aren’t coming closer to shore if the consumer continues to buy their hearts out,” said Chris Rupkey, chief economist at MUFG. “Fed officials are unlikely to cut rates too much deeper as they seek to get out in front of the risks the economy faces acting early instead of being too late.”

Retail sales rose 0.4 percent last month, lifted by spending on motor vehicles, building materials, health care and hobbies. Data for August was revised slightly up to show retail sales increasing 0.8 percent instead of 0.7 percent as previously reported.

Economists polled previously had forecast retail sales would gain 0.2 percent in August. Compared to August last year, retail sales advanced 4.1 percent. Retail sales have increased for six straight months, the longest such stretch since June 2017.

But with the Trump administration this month slapping a 15 percent tariff on Chinese consumer goods such as televisions, apparel, bed linens, smart watches and footwear, there are concerns U.S. retail sales could pull back. Economists and retail groups expect U.S. businesses will pass on the duties to consumers, thereby raising prices for the targeted goods.

“It is too early to assess the impact of the new tariffs that took effect at the beginning of this month, but they do present downside risks to household spending,” said Jack Kleinhenz, chief economist for the National Retail Federation in Washington.

Households’ worries about the new round of tariffs were also underscored by a small rise in consumer sentiment early this month. The University of Michigan said its survey of consumers found that concerns about the impact of tariffs on the economy rose in early September.

Excluding automobiles, gasoline, building materials and food services, retail sales climbed 0.3 percent last month after increasing by a slightly downwardly revised 0.9 percent in July. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have jumped 1 percent in July.

(SD-Agencies)