U.S. Retail Sales Take Record Plunge

Woeful Economy Causes Consumers To Cut Back Sharply On Spending In October

(CBS/AP)  Retail sales plunged by the largest amount on record in October as the financial crisis and the slumping economy caused consumers to sharply cut back on their spending.

The Commerce Department said Friday that retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.

The decline in sales was led by a huge drop in auto purchases, but retail industry analyst Bert Flickinger says shell-shocked consumers cut back on just about everything:

"Furniture, consumer electronics, apparel, sporting goods - every single category except for Internet sales were weak," Flickinger told CBS News.

The 2.8 percent drop marked the fourth consecutive monthly decline in retail sales and was much bigger than the 2 percent fall economists expected.

Already retailers are bracing for what they fear will be a poor holiday shopping season, said CBS News correspondent Alexis Christoforous.

The weakness was led by a 5.5 percent plunge in auto sales, the biggest drop since August 2005. Auto companies reported unit sales fell to the lowest level in 17 years as potential buyers, frightened by all the turmoil on Wall Street, stayed away from auto showrooms.

Excluding autos, retail sales fell by 2.2 percent, also a record decline, underscoring the widespread weakness last month.

Consumer spending accounts for two-thirds of total economic activity and weakness in this area was the major factor dragging down overall economic growth in the July-September quarter.

The gross domestic product fell 0.3 percent at an annual rate during the third quarter, the strongest signal yet that the country has fallen into a recession.

Many economists believe the GDP will drop by an even bigger amount in the current October-December period and will continue falling through the first two quarters of next year. They are expecting that the financial crisis, the worst in seven decades, will produce the country's worst recession since the 1981-1982 downturn.

At electronics giant Best Buy, executives are calling it the most difficult economic climate they've ever seen, with sales falling 7.6 percent in October, reports CBS News correspondent Sandra Hughes. They don't expect Christmas to be any better.

Despite these numbers, people are still coming into their stores - not to buy things but to look for work instead. Cassi Nay, operations manager at the retailer, said they've seen around a 20 percent increase in job applications in the past year. But they're just not hiring as many seasonal workers, reports Hughes.

The government reported last week that the unemployment rate shot up to 6.5 percent in October, and many economists believe it will top 8 percent before the economy starts to mount a sustained rebound.

The retail sales report showed that sales at general merchandise stores, the category that includes big chains such as Wal-Mart Stores Inc. and department stores, fell by 0.4 percent, while sales at specialty clothing stores were down a bigger 1.4 percent.

Sales at furniture stores dropped by 2.5 percent, with sales at appliance stores and sport goods stores also showing declines.

One of the few areas to show an increase was the category that includes restaurants and bars which posted a small 0.3 percent gain, perhaps reflecting the desire of some to seek solace during turbulent economic times.

And it wasn't only consumers exhibiting a lack of confidence.

Businesses cut back on their inventories by a larger-than-expected amount in September.

The Commerce Department said Friday that business inventories dropped by 0.2 percent in September. It was the first decline since March 2007 and the biggest drop in more than three years, since inventories fell by 0.3 percent in July 2005.

Economists had expected inventories would be unchanged in September. The big decline could be an indication that businesses are trying to cut back in the face of weakening consumer demand.

The 0.2 percent overall drop in inventories followed a 0.2 percent rise in August, and reflected a 0.7 percent cutback in inventories held by manufacturers and a 0.1 percent drop in wholesale inventories. Inventories held by retailers rose 0.2 percent in September.

Inventories are closely watched as signals of business confidence. When businesses are reducing their stockpiles because they are worried about future sales, it can further depress overall economic growth.

[akpals]

Sorry about the double post

[akpals]

Personally, I intend to spend more this Christmas season than I have ever done before. I will be using CASH ONLY. I intend to not only buy for my family and friends and co-workers, but also pick up a couple of families from the angel tree at my kid''''s school.

It is a small bit to do for the economy unless several million people do the same
Posted by ffoulkes at 05:50 AM : Nov 15, 2008


Well, what a noble thing you are trying to do for the economy. Thousands of Americans including myself, have been recently been laid off from our jobs, so we won''t be standing in the checkout lines with extra amounts of Christmas gifts for all those we know, and a few strangers. We will be spending our money on necessities only, and our time in unemployment lines and sending out resumes. Cheers!

[akpals]

Personally, I intend to spend more this Christmas season than I have ever done before. I will be using CASH ONLY. I intend to not only buy for my family and friends and co-workers, but also pick up a couple of families from the angel tree at my kid''''s school.

It is a small bit to do for the economy unless several million people do the same
Posted by ffoulkes at 05:50 AM : Nov 15, 2008


Well, what a noble thing you are trying to do for the economy. Thousands of Americans including myself, have been recently been laid off from our jobs, so we won''t be standing in the checkout lines with extra amounts of Christmas gifts for all those we know, and a few strangers. We will be spending our money on necessities only, and our time in unemployment lines and sending out resumes. Cheers!

[gce65]

This economic system is based on unsustainable borrowing and spending anyway; LET IT FAIL!

In truth we would all probably benefit most from a socialist/capitalist hybrid system, since neither philosophy gets everything right.

The free marketeers have tried to ram Milton Freidman''s Chicago School free market economics down the throats of South American nations for 3 decades. And those forced changes came at the barrel of a gun and at the hands of dictators like Pinochet in Chile and military juntas in Argentina and Brazil and Uruguay. Ever wonder why all those countries have eventually shifted back to the left?

[incog-nito]

Why aren''t people spending? It''s not the mortgage debacle, which affects investors, flippers, and people who took out subprime loans. It''s because people income hasn''t gone up while their big expenses have, mainly due to gasoline, health care premiums (mine shot up 25% this year), food and other products affected by gas prices. It''s also because companies are laying off full-time people and rehiring part-timers, if they rehire at all. And of course, companies are still outsourcing to other countries, or bringing them in from other countries and paying them much less.

There will be no recovery from this "recession" as there is no more consumer base left. When jobs continue to be lost, how will people spend their way back to economic prosperity?

[omnibus66]

This will be the worst holiday season for retailers ever, and it doesn''t take a genius to figure out why.

Obviously the ''surge'' worked beyond George Bushs wildest expectations. Oh, I''m not talking about Iraq, I''m talking about the surge in oil prices that he promised the Oil Industry in the secret meetings he and Cheney had at the beginning of his first term.

So now that the poor and middle class have been economically gutted to finance the largest increase in wealth of rich people in American history, these same rich people are whining because we are spending less.

I hope Obama raises their tax rate to 99.99%.

[ffoulkes-2009]

Repugs must be short on cash...even kiddie porn sales are down!
Posted by POTUS_Obama at 01:48 PM : Nov 14, 2008




HOW DO YOU KNOW THAT?????????

Posted by MaharajaG at 03:13 PM : Nov 14, 2008
_______________________________________________________________________________
Cuz he is the primary provider of such services would be my guess...

[ffoulkes-2009]

all you read on here is: repugs this, repugs that...dems are going to do this, repugs are going to do this....dems caused this, its repugs fault!! you never see anyone write what they are going to do personally to improve theirs or somebody elses life. its sad.

Posted by jamesm12341 at 02:29 PM : Nov 14, 2008
_______________________________________________________________________________
Personally, I intend to spend more this Christmas season than I have ever done before. I will be using CASH ONLY. I intend to not only buy for my family and friends and co-workers, but also pick up a couple of families from the angel tree at my kid''s school.

It is a small bit to do for the economy unless several million people do the same.
-------------------------------------

[ffoulkes-2009]

The bottom line is that the population has outgrown what a capitalist economy can support while at the same time producing an ever increasing standard of living. Something in that trifecta has to change. Either the capitalist economy which demands losers exist as well as winners, the population size which is bigger than the number of legitimate value producing jobs, or our standard of living which we demand to always get better.

Posted by eggy1620 at 12:08 PM : Nov 14, 2008
_______________________________________________________________________________
Of course, changing one of these three factors will inevitably change one or both of the others...

[ffoulkes-2009]

In what cases would you accept a foreign entity coming in and invading the US? If you wouldn''''''''t accept it, you shouldn''''t expect anyone else to accept it...especially when they did nothing to us.

Posted by whatithink10 at 09:45 AM : Nov 14, 2008
__________________________________________________________________
Well...If our President became Dictator-for-life, started a racial or ethnic ''cleansing'' of our nation and began to imprison, torture, then kill any disagreeing figure...I think about then.

[whitemale08]

Maybe if you hand off more ''tax cuts for the rich'' it will ''trickle-down'' to main-street and turn this economy around....NOT.

However Lyndon Larouche''s ''global recovery'' plan must be implemented asap or we will plunge ourselves into a "New Dark Age" that is already unfolding.

larouchepac.com

[kellyharris5]

This tally is bias and racist. This survey is based upon white consumers only. We have the true facts posted. www.theseriouspolice.com

[earache4]

So when will the ''R'' word be replaced with the ''D'' word?

[rickwar]

Check out the Military Maneuvers taking place in L.A., practicing Crowd Control and Civilian Uprising Suppression......they aren''''t practicing these things without reason......get ready for the really, really, REALLY, Bad Days.......they''''re coming down the Road at a 1000 MPH, and they won''''t be stopping for a Latte........


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

Posted by singinrich at 06:04 PM : Nov 14, 2008

This is how lies and distortions begin. It was an earthquake prep drill, the largest ever held in California, and it had been over a year in prep.

Typical fear and panic BS

[rickwar]

"We''re screwed"
"Our enemies will see us as weak"
"Credit markets have crashed"
"You can''t get loans"
"Take your money and run"

Plus all the rest here today.

Continue being negative, continue seeing doom and gloom. Guess what? You''ll make it happen and we''ll talk our way right into it.

The current administration has sold the fear and panic to us for 8 long years. Can the red yellow green credit alert warning be far behind?

Is it bad out there? Yes and no. If you are unemployed at the moment or close to the edge, yes. However, how many poster here are out of work, in danger of your home or car being snapped, your job in danger? Be honest, think about it.. Being careful at the moment makes sense, but it''s far from the end.

Something else, regardless of what party you are have some faith in the US as a whole and the process that is government.

A lot of you here haven''t been through a tough time (age) I''ve been through a number of recessions, my parents went through WWII, Great Depression, every recession in the 60''s the 70''s.

There are still many bright spots out there and bargins in the stock market, housing, auto''s and even business creation.

Folks it isn''t that bad.

[bobnjersey]

[and the third is when your enemies see you weak, they are encouraged]
[Posted by jgg0002 at 04:54 PM : Nov 14, 2008]

and this is why we should care about what others around the world think of us.

i would expect that all those who have made claims that ''what others think of us does not matter'' are going to step up and be on the front line of defense against these risks. i have little expectation that they will ... since their existance rests on a foundation of ignorant self interest.

[bobnjersey]

[That was his plan to reduce the trade deficit. What''''s YOUR plan? Obviously letting the free market do its magic hasn''''t worked very well as far as the U.S. economy is concerned (although it''''s worked great for China''''s economy).]
[Posted by incog-nito at 04:12 PM : Nov 14, 2008]

i don''t have a plan ... i''m not an economist.

there are many alternatives to the mantra ''free trade''. it''s not a simple model ... if it was we wouldn''t have the issues we''re seeing today.

there are many factors that are not fully understood that tie currency to trade ... so with a single policy from one player in a complex game, it is difficult to foretell effectiveness.

for one interesting view on our current situation, it''s likely causes, and what might be at least part of the solution is below. this guy foretold the collapse of communism in 1977 ... and everyone called him crazy.

http://www.amazon.com/Myth-of-Free-Trade/dp/B001D1SRIM

http://www.amazon.com/New-Golden-Age-Revolution-Corruption/dp/1403975795/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1226699250&sr=8-1

here''s another one from kevin phillips:

http://www.amazon.com/Bad-Money-Reckless-Politics-Capitalism/dp/0670019070/ref=pd_sim_b_9

and another good one from naomi klein:

http://www.amazon.com/Shock-Doctrine-Rise-Disaster-Capitalism/dp/B001FB62GY/ref=pd_sim_b_2

[perk235]

Since the majority of our GDP rests on consumer spending, we''re in for some rougher times.

[presjfk]

nearly everything the average American has, was bought and paid for on credit. Now that the average American cannot borrow, the economy is dying. That means that we will need to go back to the good old days - making money to pay the bills and not being able to endlessly borrow to pay for a lifestyle that one cannot afford. The idea that our economy will rebound in a couple years is hard for me to believe. We have undermined the foundation of our economy; manufacturing and service jobs which have been and continue to be sent overseas. We''re screwed.

[dkhorse1]

Posted by fhmullane at 03:51 PM : Nov 14, 2008
I totally agree that we should live within our means. Economists however would turnover in their grave, and we should put everyone in a grave.

Debt has brought America to its knees, debt, debt. The economy hasn%u2019t grown, it has just become indebted to others (which we can%u2019t pay back).