Retail sales post worse-than-expected showing
WASHINGTON (AP) - March 13, 2008 The Commerce Department reported Thursday that /*retail sales*/ fell
by 0.6 percent last month, far worse than the 0.2 percent increase
that analysts had been expecting.
The weakness was widespread with sales of autos, furniture and
appliances all down.
It marked the second time in the past three months that retail
sales have taken a tumble. Sales had fallen by an even bigger 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.
Consumer spending is closely watched because it accounts for
two-thirds of total economic activity. Many economists believe that
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.
In another report, the Labor Department said that the number of
laid-off workers filing applications for unemployment benefits was
unchanged this past week at 353,000, the same number as last week.
That was a slightly better showing than analysts had been expecting
although the benefit applications remain at elevated levels
indicating the labor market is under stress.
The government reported last week that employers slashed
payrolls by 63,000 in February, the second straight monthly decline
in employment and the most dramatic evidence to date that the
country could be sliding into a recession.
A third report Thursday showed that U.S. import prices rose last
month by 0.2 percent after jumping an even larger 1.6 percent in
January. Compared to a year ago, import prices are up a sharp 13.6
percent, reflecting the fact that petroleum prices are up 60.9
percent over the past year.
The rising cost of imported goods reflects the bind the Federal
Reserve faces at the current time as it must deal with the twin
threats of a sluggish economy and higher inflation.
Analysts expect that the Fed will continue to emphasize its
battle against recession and cut interest rates sharply when
officials hold a regularly scheduled meeting on Tuesday.
Meanwhile, the government said that inventories held by
businesses on shelves and backlots shot up by 0.8 percent in
January, the largest amount in nearly two years. That gain was much
larger than the 0.5 percent increase that had been expected and it
followed a sizable 0.7 percent rise in December.
The big jump likely reflected an unwanted rise in inventories as
business confidence falters in the face of the sharp slowdown in
overall economic activity.