Bleak Reports Spur Recession Fears

December Retail Sales Worst Showing Since June; Wholesale Prices Up 6.3 Percent In 2006

(CBS/AP)  Frugal shoppers cut back on their spending at the nation's retailers by 0.4 percent in December, the most in six months, in a gloomy report that fanned fears of a recession.

The Commerce Department reported Tuesday that the drop in retail sales, which followed a brisk 1 percent gain in November, marked the worst showing since June, when merchant sales declined by 0.8 percent.

Shoppers turned into penny-pinchers under the strains of a deteriorating job market, expensive energy bills and a persistent housing slump that has weakened home values and propelled foreclosures to record highs.

"Consumers held tight to their wallets in December, raising questions about whether household spending will be enough to keep us out of a recession," said Joel Naroff, president of Naroff Economic Advisors.

In another report, the Labor Department said wholesale prices dipped 0.1 percent in December, but were up 6.3 percent for all of 2007, the biggest annual gain in 26 years, mostly reflecting higher energy costs.

On Wall Street, stocks tumbled in morning trading. The Dow Jones industrials were down more than 190 points.

But Economist Peter Morici told CBS News correspondent Anthony Mason that the housing crisis is taking the economy down, too.

"This recession wasn't created on Main Street, it was manufactured on Wall Street," he said.

Excluding sales of automobiles, which can swing widely from month to month, sales at all other retailers also fell by 0.4 percent in December, the biggest decline since August.

The report was much weaker than many economists were expecting. They were forecasting overall sales to be flat last month and for sales - excluding autos - to dip by 0.1 percent.

Odds that the country could slide into a recession this year have grown.

The big worry is that consumers will keep on slicing spending, plunging the economy into a recession.

To bolster the economy, Federal Reserve Chairman Ben Bernanke pledged last week to aggressively lower interest rates. Many economists predict the Fed will slash its key rate, now at 4.25 percent, by a bold half-percentage point later this month. The Fed cut rates three times last year in an effort to induce consumers to boost spending, which would energize overall economic activity.

Even so, a housing slump, weaker home values, harder-to-get credit and high energy prices all "seem likely to weigh on consumer spending as we move into 2008," Bernanke said last week as he warned that downside risks to economic growth have become "more pronounced."

Many analysts predict upcoming reports will show the economy grew at a feeble pace of just 1.5 percent or less in the final three months of last year and will be weak in the first three months of this year as consumers - major shapers of overall economic activity - tighten their belts.

Adding to worry about how consumers will hold up: Consumer confidence, as measured by the RBC Cash Index, fell in January to its lowest point on record dating back to 2002. Worries about jobs, energy bills and home foreclosures darkened people's feelings about the country's economic health and their own financial well-being.

Against this backdrop, the White House and the Democrat-controlled Congress are exploring ways - including the possibility of temporary tax rebates - to get money quickly into the hands of consumers and help stimulate the economy.

For all of last year, retail sales rose by 4.2 percent. That was down from a 5.9 percent increase in 2006 and marked the smallest rise since 2002, when sales went up by just 2.4 percent as the economy was recovering from the 2001 recession.

"Higher prices for energy and food, together with falling confidence, are hammering discretionary spending," said Ian Shepherdson, chief economist at High Frequency Economics.

The weakness in the retail sales report was fairly widespread, underscoring the stresses on consumers.

Sales at building and garden supply stores, for example, fell 2.9 percent in December, the most since February 2003. Purchases of electronics and appliances dropped 1.9 percent last month, the most in nearly two years.

Clothing sales declined by 2 percent, the most since September 2005. Sales of sporting goods, music and books also fell by 2 percent. Car sales and department store sales each dipped 0.4 percent. Gasoline station sales dropped 1.7 percent.

A few bright spots: sales at furniture stores rose 0.6 percent. Sales at food as well as health and beauty stores each rose by 0.7 percent and sales at bars and restaurants increased 0.2 percent.

There were a number of reasons why shoppers turned cautious.

One big reason is a weakening job market. Hiring practically stalled in December, pushing the unemployment rate to 5 percent, a two-year high.

Another concern is the meltdown in the housing market, which has dragged down home values and made people feel less wealthy. Harder-to-get credit has made it difficult for some to make big-ticket purchases. And, high energy prices are squeezing wallets and pocketbooks.

Oil prices recently surged past $100 a barrel, though the price has moderated somewhat. Gasoline has topped $3 a gallon. Those high energy costs for fueling cars and heating homes are leaving people with less money to spend elsewhere, analysts say. In turn, prices for some other goods and services have risen.

[b-easy63]

As long as we are burning the constitution, let''''s get rid of that pesky free speech item, cause you''''re as dumb as a stump and really don''''t want to read your shiite anymore.

Posted by mbcsmith at 04:32 PM : Jan 15, 2008


"Shiite?" Then again they could invoke true Shiite laws--and could just gouge out your eyes, then you would not have to read his ******* anymore LOL and they could cut off your fingers and your tongue. The first so that we don''t have to read your virtual whining anymore and the second so that those who actually live near you, don''t have to hear it either. LOL

[b-easy63]

Bad times are coming--and it is the net result of:

1. failing to shore up the infrastructure (and pay for it through taxes)

2. Failing to invest in and pay for a strong educated public sector (many citizens just want scam tests an no new taxes)

3. Pimping out the jobs of America--so that there is no mfg base and no true production sector--what''s left is the portion that caters to the spending crowd--but that relies on the producing crowd (where will the jobs come from?)

4. focusing on wars and destroying others as a means of market diversification and securing resources (oil) that is working out realllllly well, huh?

5. Believing that if 5% of Americans are allowed to keep most of their money and concentrating the majority of the country''s wealth in their hands..that they will somehow supply the means and jobs to keep the rest of the 300 million going--instead of saving it for their kids and descendants or themselves (trickle down--idiocy)

In other words, no matter how many dentists, hairdressers, home builders, lawn mowers, retail, restaurant, hotel and secretarial staff there is--ultimately they rely on people spending money to use their services, each group does hire--but the people are service related. This means that ultimately they are catering to those who produce.

[b-easy63]

Gee--if the economy was as strong and steady as Bush and his stooooopid followers insist that it is, consumer spending could NOT spur a recession as there''d be other components to our economy like strong production rates. But Nooooooooo. We can''t have those as the production jobs are almost all outsourced to other countries. About the only thing we had as our remaining skill was spending.

Spending on needless junk--and spending on the servitude of others to help us maintain our needless junk.

New report out today, that inflation is the worst ever seen in 17 years...gee--who besides Bush and the rest of his "WMD east, west, north and south of Takrit head up their azz base"--did not already know this? rotflmao

[hypnotoad72]

strewthmate - I remember the days when Americans made their own. Everybody prospered. And everybody was still civilized toward one another.

It''d be nice to have such prosperity again.

The question is: How to do it.

[strewthmate]

... why all the long faces?

FINALLY we have woken up to the fact that you can not defy the laws of mathematics forever... that you should only buy what you need and can afford.

This is a good thing and maybe, just maybe, heralds the end of the "I am what I own" mentality that has poisoned the true spirit of the american people.

[searingtruth]

"ST,
...And one big treasonous act..."
stevex47


I wish it were only one treasonous act, but in fact they have committed too many to count.

If only the Democrats, and at least a few Republicans who still count themselves as Americans, would have stood up to stop it.

And yet, even though they had opportunity after opportunity, none did. In fact, even after so many Democrats, and Independent voters such as myself, graciously awarded the Democrats the House and Senate they only accelerated their cooperation with Bush''s subversion of our Constitution, becoming forever complicit in it.

And it wasn''t until recently that we found out why. Almost the entire leadership of the Democratic party new and approved of Bush''s crimes all along. That''s why they won''t dare impeach him, because they''d also have to impeach Feinstein, Rockefeller, Pelosi, and many more.

And yet all the Democrats need do, and they could still do it today, is clean their own house along with Bush and the Republicans, impeaching and trying all who have committed treason against our great nation, regardless of party.

And they would not only sweep the next elections, but also instantly become the heroes that saved our nation.

But it appears neither party has any plans of coming to our rescue, which is why I have been saying for so long that we must save ourselves.
ST


"Our government is no longer American, thus, as in the beginning, the people must suffice."
SearingTruth

A Future of the Brave - www.searingtruth.com

[joyous88]

mbcsmith

Hey Dude! Can''t handle the truth?

[mbcsmith]

As soon as the Judicial branch stepped in...boom, we got you know what.


--------------------------------------------------------------------------------

Posted by stevex47 at 04:19 PM : Jan 15, 2008

As long as we are burning the constitution, let''s get rid of that pesky free speech item, cause you''re as dumb as a stump and really don''t want to read your shiite anymore.

[stevex47]

I''d like to abolish two things.

1) Electoral College.

2)Presidential term limits. Clinton would still be in.
Whoever gets most votes wins. One last time, maybe the repubs will get it. In 2000 Gore got more votes. WE The People wanted Gore, not Bush. As soon as the Judicial branch stepped in...boom, we got you know what.

[stevex47]

ST,
"now the land of secret prisons, illegal abduction, indefinite incarceration without charge or representation, torture, murder"

And one big treasonous act....outting CIA agents identity.

Blasphemous that THEY tout securing America. LIARS. Hypocrits.

Amazing how we can go from prosperity, surplus to this, so quickly.

A whole lot of republicans made big money during the Clinton years. You''d think they would have the brains to do it again. Maybe not.

[joyous88]

The jobs most people now have are servicve , that pay squat-
The economy is in ruins, Thank the conservative evangelical WAR on humanity for this mess.

[searingtruth]

"Ahhh, my poor America lost.

Once the land of the free and home of the brave, we are now the land of secret prisons, illegal abduction, indefinite incarceration without charge or representation, torture, murder, universal surveillance, and preemptive war of conquest.

But that didn''t seem to be enough to wake us up.

Perhaps waking up to the fact that our economy has been destroyed, and that we are now literally owned by the Chinese and other foreign enemies, might finally cause us to think, and act.

Perhaps the founding fathers were right after all, and Bush and all of his accomplices should be impeached and tried for betraying them, and our beloved Constitution.

Or perhaps we will simply continue to head full speed down the path to our own destruction.

It''s up to us fellow Americans. Do we value our freedom and humanity so little that we no longer deserve them? Or will we once again stand to defend and uphold American liberty?"
SearingTruth


"We destroyed all our self proclaimed enemies, and then fished every last fish from the sea."
SearingTruth


"Two parties.
One fate."
SearingTruth


A Future of the Brave - www.searingtruth.com

[bookwerm314]

The News Reporting, in this day and age, is just pathetic! They do not question underlying assumptions, and hype bad news without a filter.

First off, we were spending, AS A NATION, more than we make in personal salaries etc. Between home equity loans and refis, folks were pulling out money from their houses etc. to buy more than their yearly income stream could support. Now, connect the dots. Housing has dropped. The source of the Income Amplification is gone. How could we NOT reduce spending? And how could we not, eventually, reduce spending to some number at or below our incomes? NONE of this is discussed in this or ANY Mainstream news article, just pathetic. Where is the evaluation of the news? This is not bias, just dollars and sense.. you can get 10$ out of a 5$ piggybank! At least not forever :-)

So, I do encourage you all to email your papers, newshows etc. to figure out what America CAN afford, how much of an Economic drop that IS, and how it will likely impact us. Some REAL reporting.

[stevex47]

B easy,
All well written ! The only problem is it falls on deaf (or dumb) ears.

It''s like trying to talk logically to Hitlers or Manson''s or Koresh or bush or Limbaugh followers.

A lost generation. They''ll never get it. We''re gonna pay for this for a LONG time.

The good news is, we''ll bash bush for centuries to come. And deservedly so.

[b-easy63]

When a President exhorts a country over bloated with cars and other goods to keep buying to keep the economy moving--it says at least 2 things:

1. Our econonmy is driven by what we can spend NOT by what we can produce (making us users, subject to the whims of the producers)

2. That sooner or later a consumer driven economy MUST crash and burn--because use is finite--sooner or later the market is saturated--at that point, new economies must be found (like the one Bush thought he would have in the ME) Our economy will crash because we no longer produce our goods--we are just users and we are on the verge of being all used up--plus it does not help that by creating new ways to use our money (like super high gas and food prices) we have less to spend.

Economy 101: Pay a man modest wages that have not effectively increased to reflect COL for the past 10 years-- then even with leverage and credit, don''t expect him to spend more than three times his income --not when the costs of living require he pay out at least 5X that amount. The gravy train is coming to a grinding halt. WATCH.

[b-easy63]

Now that the Government claimes making hamburgers at McDonalds is a "manufacturing job" When Citicorp employees start applying for their new jobs where ever they can--Bush can claim an increase of THOUSANDS into Manufacturing. LOL

[trillion1]

Only a moron just looks at the employment numbers and says things are great. It''s what the jobs pay that count. A 100% at minimum wage would be nothing to brag about.

[b-easy63]

Most of us will have no jobs or money"?? Are you insane? The unemployment rate is 5%. 95% of us are employed. You''''re completely stupid.

Posted by mike71067 at 02:04 PM : Jan 15, 2008

Employment at where? doing what? In an economy that is American consumer driven--in other words --smoke and mirrors. The highest DOW ever? Only if your memory does not remember the Highs of the 1990s. For the first time EVER in history, the Canadian dollar is worth MORE than the American dollar and the Australian dollar is almost worth as much. The British pound is worth more than 2X the value of the dollar and the Euro is 1.5X.

As for thinking this means we can export more--get real--we are no longer a production nation, we are service oriented. This means we have very little to export and we actually import more than we export. Given the value of the dollar which continues to decline as George prints more useless bills, this is no surprise. We are not going into a recession --we have been in one. It was just lied through. When a man loses a 60K job and it is replaced by a 10K or 15K job--that is not progress and only George and people like you crow about the net increase in employment. 1 person who went from 60K to 30K with 2 jobs is not an increase except in LIAR land.

[mike71067]

"Bush says there is no recession: most of us will just have no jobs and no money to buy anything..that''''s all. LMAO"
-Posted by b-easy63 at 02:01 PM : Jan 15, 2008

"Most of us will have no jobs or money"?? Are you insane? The unemployment rate is 5%. 95% of us are employed. You''re completely stupid.

[b-easy63]

If any idiots want to blame it on Bush, they need to also give him credit for the fact they they were able to purchase their first house during his administration, like we did. And if they''''re stuck in a sub-prime mortgage, that''''s their own *** fault.

Posted by mike71067 at 01:12 PM : Jan 15, 2008

Well, I am blaming Bush and he gets no credit for the purchase of my 1st, 2nd, 3rd , 4th or 5th home all purchased before he ever became President....LOL.

He is a loser and you are in denial and a lover of losers. He contaminates everything he touches. Guess he was all over you and the other neo cons. LOL