U.S. retail sales fell 0.5% in June
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A woman walks into a Lane Bryant store in San Jose, Calif., last month. Americans cut their spending at retail businesses for a third straight month, as a weak job market made consumers more cautious, the Commerce Department said Monday, July 16. (June 15, 2012) Credit: AP
The outlook for the U.S. economy appeared dimmer Monday after a report that Americans spent less at retail businesses for a third straight month in June.
The report led some economists to downgrade their estimates for economic growth in the April-June quarter. Many now think the economy grew even less than in the first quarter of the year, when it expanded at a sluggish 1.9 percent annual rate.
Somewhat offsetting the gloomy national retail data Monday was a positive report about factory activity in the New York region, which is growing at a slightly faster pace. The Federal Reserve Bank of New York said its Empire State manufacturing index increased to 7.4 in July from a reading of 2.3 in June. Numbers above zero indicate growth.
Still, national spending in June fell in nearly every major category -- from autos, furniture and appliances to building, garden supplies and department stores. Overall, retail sales slid 0.5 percent from May to June, the Commerce Department said.
Retail sales hadn't fallen for three straight months since the fall of 2008, at the height of the financial crisis.
"However hard you look, there's just no good news in this report at all," said Paul Ashworth, chief U.S. economist at Capital Economics.
Retail sales were still 4.7 percent higher in the April-June period than in the second quarter of 2011. And retail sales don't include spending on services, which represents a larger portion of the economy.
Chris G. Christopher Jr., senior economist at IHS Global Insight, said IHS thinks the economy grew at an annual rate of just 1.3 percent in the April-June quarter. Christopher said the biggest problem is meager job growth. Consumers have also been rattled by gyrating stock prices stemming from Europe's debt crisis.
"Consumers are getting hit from all sides at the moment," Christopher said, despite the benefit of sharply lower gas prices since April.
The decline in retail sales reflects, in part, falling gas prices. But even excluding sales at gas stations, retail spending fell 0.3 percent from May to June.
As hiring has slumped, pay has barely kept pace with inflation. As a result, consumers have pulled back on their spending.
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'I'm going to try to avoid it' A trip to the emergency room in a Long Island hospital now averages nearly 4 hours, data shows. NewsdayTV's Virginia Huie reports.
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'I'm going to try to avoid it' A trip to the emergency room in a Long Island hospital now averages nearly 4 hours, data shows. NewsdayTV's Virginia Huie reports.