Retail Sales At Weakest Point In 5 Months

Economists Pessimistic About Future; White House Blames Overall Dip On Declining Auto Sales

(AP)  Retail sales fell in July, the weakest performance in five months, as shoppers shunned autos and other big ticket items.

The Commerce Department reported Wednesday that retail sales dipped 0.1 percent last month when a variety of economic woes combined to blunt the impact of billions of dollars in government stimulus payments to U.S. households.

It was the first decline since sales had fallen by 0.5 percent in February and it was a worse showing than the flat reading economists had been expecting. The new report did revise higher the estimate for June, showing sales rose by 0.3 percent that month rather than the 0.1 percent initial reading.

The weakness in July came after another big slide in auto sales as Detroit faced its worst sales month in 16 years. Automakers have been battered by the weak economy and record gasoline prices which have cut into demand for their once-popular sport utility vehicles and pickup trucks.

The White House noted that overall sales had been heavily influenced by the big drop in auto sales and what presidential spokesman Tony Fratto called "substantial headwinds faced by households." Fratto said that the weakness in July was occurring at a time when gasoline pump prices were peaking at more than $4 per gallon.

Excluding the big drop in autos, retail sales would have posted a 0.4 percent increase. While that was a positive reading, it was still the weakest showing for sales excluding autos in five months.

Much of what little strength there was in July came from a big jump in sales at gasoline stations, which were up 0.8 percent. That increase reflected surging prices rather than increased demand, however.

Analysts said the poor showing in July, the last month for bulk mailings of stimulus checks, raised concerns about consumer spending going forward.

"Cautious and uncertain consumers are watching their wallets and with the back-to-school shopping season under way, that does not bode well for retailers," said Joel Naroff, chief economist for Naroff Economic Advisors.

For example, Macy's Inc. said Wednesday that its second-quarter earnings dropped slightly and it warned that full-year profits will be below Wall Street expectations.

On Wall Street, stocks fell for a second session after the retail sales report and oil prices rose.

In other economic news, the Labor Department reported that surging oil prices helped to push up import prices by 1.7 percent in July and left import prices up by 21.6 percent compared to a year ago, the biggest year-over-year reading on record.


In a third report, the Commerce Department said that business inventories rose by 0.7 percent in June, nearly double the 0.4 percent gain in May and the biggest increase since last January.

Analysts believe that businesses will continue boosting inventories in the months ahead. The ratio of inventories to sales fell to an all-time low of 1.23 months in June, meaning it would take that long to exhaust stockpiles at the June sales rate. Sales at all levels of business rose by 1.7 percent in June, up from a 1.1 percent gain in May.

Gasoline pump prices hit an all-time high in July at $4.11 per gallon. Without the big rise in gasoline station sales, retail sales would have fallen by 0.2 percent in July.

The disappointing performance of retail sales meant that the consumer sector, which accounts for two-thirds of total economic activity, got off to a weak start at the beginning of the third quarter. The government wrapped up distributing the bulk of the economic stimulus payments for a total of $92 billion through the end of July.

The Bush administration and Congress rushed a $168 billion package of stimulus payments to households and tax breaks for businesses through Congress at the beginning of this year. They were hoping to keep the worst slump in housing in decades and a severe credit crunch from pushing the country into a deep recession.

The stimulus payments, which the government started distributing in late April, have had only a limited impact on consumer spending. Their benefits have been blunted by a surge in gasoline prices that was occurring at the same time.

Studies have shown that so far about only 20 percent of the stimulus checks have been spent with consumers choosing to save much of the rest of the payments. The administration argues that the checks will get spent in coming months, helping to lift economic activity for the rest of the year.

Private economists are not as optimistic. Some believe that the effects from the stimulus will fade after the current quarter and activity in the final three months of this year and the first three months of next year will slump dramatically. Some economists believe that the gross domestic product will contract in both quarters, fulfilling the classic definition of a recession.

Democrats in Congress have begun to push for a second stimulus package. So far, the Bush administration has opposed it in part over concerns about what further stimulus activity will do to the budget deficit. The administration is already projecting the budget gap will hit a record of $482 billion next year.

For July, the retail sales report showed that sales at department stores and other general merchandise stores rose by 0.3 percent, just half the 0.6 percent June increase. Sales at restaurants and bars, which have been hit hard by the current slowdown, dipped by 0.2 percent in July after a modest 0.3 percent June gain.

Sales at furniture stores, which have been hurt by the steep slump in housing, rose by 1 percent in July but that followed a 1.2 percent decline in June.

[akpals]

I can''t really understand why these reporters write this stuff like they think we will be surprised by any of it. Americans spent their money a long time ago at the gas pump, the grocery store, and got caught up on some bills so we can avoid a major crisis later when the heating bills skyrocket. Of course those who get food stamps, heating assistance, HUD housing, and free medical care probably had a hayday down at Walmart. Did they honestly think people are dumb enough to spend their stimulus check on "big ticket items"?

[lewiston14]

When xmas season rolls around dont spend a dime. They might get the hint.

[noloyalisti]

What happens (beside fascism) when the Grand Oil Party (and McSame) opposes alternative energy and invites the fat cats from the oil companies in to write the energy policy? You have a ruined economy. No wonder they are trying to blame Democrats. No wonder they are called the Grand Oil Party. No wonder it is more of the McSame

[Gary Kempf]

Studies have shown that so far about only 20 percent of the stimulus checks have been spent with consumers choosing to save much of the rest of the payments. (The administration argues that the checks will get spent in coming months, helping to lift economic activity for the rest of the year.)

The administration needs to wake up,I would imagine a good portion of those that got the $600.00 have nothing left of it to spend. When winter hits it is really going kill the retailers....

[trillion1]

Why don''t the bushbots explain to us why we are so much better off than we were 8 years ago?

[trrrorislamx]

Posted by shado269 at 04:04 AM : Aug 14, 2008

NO nancy,,,

recession
Definition
Period of general economic decline, defined usually as a contraction in the GDP for six months (two consecutive quarters) or longer. Marked by high unemployment, stagnant wages, and fall in retail sales, a recession generally does not last longer than one year and is much milder than a depression. Although recessions are considered a normal part of a capitalist economy, there is no unanimity of economists on its causes.
http://www.businessdictionary.com/definition/recession.html

[trrrorislamx]

DEMONIC-RATS DO NOT WANT SECRET BALLOTS,,,

For some, right to secret ballot could be lost
http://www.ajc.com/opinion/content/shared-blogs/ajc/thinkingright/entries/2008/08/13/right_to_vote_in_privacy_could.html

NEVER VOTE DEMONIC-RAT AGAIN,,,

THEY ARE FOR COMMUNISM,,,

Howard Stern vows never to vote for Democrat again due to merger opposition: ''They''re for Communism''...
http://www.businessandmedia.org/articles/2008/20080724152511.aspx

some people are slow learners,,,

must be the DEMONIC-RAT controlled public education/propoganda system,,,

[lucasnico]

I am stil spedning money. Just got back from a week in Hawaii. Bought a few things there.

As far as everyday stuff...we are not worried about our jobs and have been through "crises" like this before.
It will pass and people will be better off again.

Fortunately, I live about three miles from work so gas has not been a real issue.

Posted by jeff92706

Glad your squeezing by, Jeff! Can''t wait to read the rest of your Christmas letter.

[lovesamerica]

I am personally feeling the pinch, I now have to try and sell my family home,the place that is the center of my happiness,my only happiness. NY taxes,heating costs,even though my furnace is set for 55, feed costs for my animals,repair costs,gas prices,and the fear of losing my main job all are responsible. I have a terrific mortgage rate,but the upstate taxes are double the cost of my monthly mortgage,and I am sure they won''t be dropping anytime soon..haha. So as I watch my dream, and very life slip away, I can say that it ain''t over yet. I have struggled to hold on to my home for 10yrs. on my own,working many many extra jobs, now Thanks to the economy, I can and do feel like a failure. Not much to smile about anymore....

[iphyt4u]

Soon you''ll see that foreclosurers are affecting tax revenues. School districts will be paying more for busing than education. The republicans have got us where they want us. They''re trying to keep the common man down. Why else would you give tax breaks to the wealthiest 10%. By giving people rebate checks, the Bush administration bought themselves some time. Now the problem falls on the next President. $800 billion spent in Iraq, and that doesn''t even include the yearly defense department budget of $500 billion.

[trillion1]

Wait till the winter heating bills start arriving.

[whitemale08]

This story is just a couple of drops from the onrushing tsunami economic turmoil to come.

Because "Republican Suicide Bombers" have been sent by the British namely by Tony Blair to blow out economy by another unneccessary war.

Now that that mission has been accomplished, it''s time to shut down our fake and phony consumer-led service-sector debt-based economy.

[stn_sage]

The public is in trouble anytime it''s political leaders ignorantly believe they can improve bad economic times by stimulating the economy via INCREASING the soaring national debt by issuing STIMULUS CHECKS---also known as ''rubber checks''!

The stimulus checks didn''t work, so what are the politicians considering doing AGAIN?! YUP!
You guessed it! Issuing another round of checks!

November can''t come soon enough!

[randynason]

Greetings and see you in hell.



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

Posted by funnyclown7

Mom?

[randynason]

This is going to be the best Christmas shopping season, ever!

[funnyclown7]

These are very exciting times. Watching a superpower collapse is something i never thought possible. I really hope that your businesses will be sold as scrap parts and junk and you people starve to death. That4s gonna be fun.
But i want to contribute to revert this situation, so here it is, some activities you people should stick to:
1.information technology. msft, cisco, ibm, sun, google and others are unbeatable. Your kids should study that.
2.entertainment. so far u are doing a great job on this subject. Reading your posts here is hilarious and personally I think you are natural born entertainers. Stick to movies, hollywood, vegas and disneyworld.
3.porn. Yup, you dont want your daughters filming porn, but there are zillions of good american made porn videos around. I hope that remains the same ;)
4.drugs. You should keep doing them, you are good at them too.
Forget about manufacturing, finance, insurance, beer, oil, cars, airplanes, spaceships, food, medicines, etc. Leave that to germany, china, france, india, brazil, mexico or even lesotho. Everybody could do better than u did.

Greetings and see you in hell.

[iphyt4u]

Don''t buy anything until after the election, except for essentials. Send Bush and his oil buddies a message.

[oscarez]

If Bush were not spending at record levels it would be a lot worse.

[tablink]

Obviously the benefits of the stimulus package were short-lived. It would be much more logical to continue a much greater economic stimulus to consumers, who generate 70 % of the economy, in the form of greatly increased social services including universl health care.

[jlagat]

"Economists Pessimistic About Future; White House Blames Overall Dip On Declining Auto Sales"

Because rising food and energy prices along with a weakened dollar have absolutely nothing to do with it.