Retail sales dip, stoking concerns of a recession
WASHINGTON - Consumers, battered by plunging home prices and a credit crunch, stayed away from malls in February, pushing retail sales down a larger-than-expected amount. It was another worrisome sign that the country could be falling into a recession.
WASHINGTON - Consumers, battered by plunging home prices and a credit crunch, stayed away from malls in February, pushing retail sales down a larger-than-expected amount. It was another worrisome sign that the country could be falling into a recession.
The Commerce Department reported yesterday that retail sales fell 0.6 percent last month, far worse than the 0.2 percent increase analysts had been expecting.
The weakness was widespread, with sales of autos, furniture and appliances all down.
It marked the second time in the last three months that retail sales had taken a tumble. Sales fell an even greater 0.7 percent in December, the largest drop in six months, as the nation's retailers suffered through a dismal holiday shopping season. Sales posted a modest 0.4 percent gain in January.
Wal-Mart Stores Inc. chief executive officer H. Lee Scott said sales growth at the world's biggest retailer was outpacing the performance of competitors because "people need to save money right now."
"If you look at Wal-Mart, the customer needs us more today than they ever have," Scott said.
Consumer spending is closely watched because it accounts for two-thirds of total economic activity. Many economists say they believe the country will suffer a mild recession in the first half of this year as the economy is unable to withstand the blows from a prolonged slump in housing, record-high energy prices, and a severe credit crisis brought on by soaring mortgage defaults.
At the White House, deputy press secretary Tony Fratto said the Bush administration expected this quarter would be a "difficult and challenging" period for the U.S. economy as it dealt with the fallout in housing and higher energy prices.
He said the administration's message to consumers was that they should have confidence in the long-term future of the economy because the benefits of tax relief and the economic-stimulus package were "coming on line," and the Federal Reserve was taking measures to foster the return of economic growth.