The October figures, driven by a surge in auto sales, exceeded economists' expectations. Yet consumers are so squeezed by tight credit and rising unemployment that economists don't expect to see significant spending until well after year's end. Even optimists predict scant improvement over last year's holiday season.
Consumer spending accounts for about 70 percent of total economic activity, so wary shoppers are a worrisome sign for retailers entering the crucial holiday season.
"U.S. consumers are no longer panicked, but they remain cautious," said Mark Zandi, chief economist at Moody's Economy.com. "They are spending just enough to keep the economy out of recession, but not enough to fuel a self-sustained expansion."
Retail sales rose 1.4 percent last month, the Commerce Department said. But excluding a big rebound in auto sales, the gain was just 0.2 percent. Strength at general merchandise stores such as Wal-Mart and Target was offset by sales declines at furniture stores, appliance stores and hardware stores.
Zandi said one telling statistic about household finances was that the number of bank credit cards in circulation has fallen 18 percent since the year began. That's happened as banks facing soaring loan losses have tightened credit standards.
Consumer credit has now fallen for a record eight straight months through September and households are struggling to manage their debt levels after the most severe recession since the 1930s.
Federal Reserve Chairman Ben Bernanke warned Monday of "important headwinds," such as the weak job market and tight credit conditions. These forces "likely will prevent the expansion from being as robust as we would hope," he told the Economic Club of New York.
The overall economy, as measured by the gross domestic product, resumed growing in the July-September quarter at what the government estimated was an annual rate of 3.5 percent. That was a sharp rebound after a record four straight declines in GDP.
Analysts noted that the retail sales report Monday included a sharp downward revision to sales in September. The government also reported last week that the nation's trade deficit rose in September by the largest percentage in a decade. As a result, third-quarter GDP is expected to drop to a more modest 2.8 percent growth rate when the government releases a revised estimate next week.
Growth for the current quarter is expected to be around 3 percent. But, analysts said, growth in the first half of next year could slow to around half that pace as consumer spending falters and government stimulus programs begin to wane.
Growth at such a weak rate would raise the threat of a possible double-dip recession. That's especially true with unemployment, now at a 26-year high of 10.2 percent and expected to keep rising into next year.
"It seems unlikely that households will be able to spend more freely anytime soon," said Paul Dales, U.S. economist at Capital Economics.
Retailers last week gave muted holiday outlooks as they reported third-quarter earnings. Wal-Mart Stores Inc. and Kohl's Corp. both said they plan to discount aggressively. J.C. Penney said it expects sales for the quarter that includes the holidays to fall.
According to a Gallup poll released Monday, Americans expect to spend $638 on Christmas gifts, equal to record-lows from November and December of 2008.
Michael P. Niemira, chief economist at the International Council of Shopping Centers, expects overall holiday sales will rise about 1 percent from last year, a historically weak performance.
The big swing in overall retail sales activity reflected a recent roller coaster ride for auto sales. New-car sales surged in August as shoppers rushed to take advantage of the government's Cash for Clunkers sales incentives, which expired at the end of August. Sales then plunged in September.
For October, auto sales jumped 7.4 percent, recouping about half of the 14.3 percent drop in September. The 0.2 percent increase in retail sales, excluding autos, was down from a 0.4 percent rise in September. It was the weakest showing since July.
In his comments on the economic outlooks, Bernanke said banks dealing with the wreckage from soured commercial real estate loans could slow progress on efforts to get credit flowing more freely again. And credit difficulties will limit the ability of some businesses to expand and hire.
AP Economics Writer Jeannine Aversa and AP Retail Writer Mae Anderson in New York contributed to this report.