Retail Sales Drop Puts Crimp In Recovery

Unexpected Decline Raises Questions About Consumer Demand

(AP)  Retail sales fell for a second straight month in April, a disappointing performance that raised doubts about whether consumers were regaining their desire to shop. A rebound in consumer demand is a necessary ingredient for ending the recession.

The Commerce Department said Wednesday that retail sales fell 0.4 percent last month, much worse than the flat reading economists expected. The April weakness followed a 1.3 percent drop in March that was worse than first estimated.

Retail sales had posted gains in January and February after falling for six straight months, raising hopes that the all-important consumer sector of the economy might be stabilizing. But the setbacks in March and April could darken some forecasts because consumer spending accounts for about 70 percent of economic activity.

The hope had been that consumers were starting to feel better about spending, helped by the start of tax breaks included in the $787 billion stimulus bill. Households had spent the fall hunkered down in the face of thousands of job layoffs and the worst financial crisis since the 1930s.

The worse-than-expected April retail sales reading came despite a 0.2 percent increase in auto sales, which fell 2 percent in March. Excluding autos, the drop in retail sales would have been 0.5 percent, much worse than the 0.2 percent gain economists expected.

Sales outside of autos showed widespread weakness. Demand at department stores and general merchandise stores fell 0.1 percent and sales at specialty clothing stores dropped 0.5 percent.

Sales also fell at furniture stores, electronic and appliance stores, food and beverage stores and gasoline stations.

The performance at department stores and specialty clothing stores came as a surprise since the nation's big chain stores had reported better-than-expected results for April. Same-store sales, rose 0.7 percent last month compared with April 2008. It was the first overall increase in six months, according to the tally by Goldman Sachs and the International Council of Shopping Centers.

For April, some mall-based clothing stores saw their declines level off and Wal-Mart Stores Inc., the world's largest retailer, had reported its same-store sales rose 5 percent, excluding fuel, which beat expectations. Same-store sales, or sales in stores open at least one year, is considered a key metric of a retailer's financial health.

The chain store sales report last week showed that Gap, American Eagle and Wet Seal posted smaller sales declines at their established locations than analysts had forecast.

The Children's Place, T.J. Maxx owner TJX Cos. Inc. and teen retailer The Buckle saw bigger gains than expected. But luxury stores again were hard hit as their higher-end wares find fewer takers.

[sayso3]

It seems like store inventories have shrunk as have sales staff. There is less merchandise to chose from and less employees to ring up a sale when you do find something you wish to buy. I guess none of this is really a surprise - you control cash flow by limiting inventory and control costs by reducing staff. Has anyone really seen an amazing improvement in prices?

[fiberglass3]

For less than a tank of gas we were able to cancel our summer vacation plans. So we lost a small deposit. I can't see why anyone would pay 58.00 for a barrel of oil.

The price of a barrel of oil was $32 in January 2009. It has been climbing ever since, finishing today around $58/barrel. The real question is: why? The economy is staggering, unemployment is at 9%, businesses that traditionally use large quantities aren?t, oil storage facilities can?t take any more, tankers waiting to unload, OPEC turning the valve off. Yet oil is on the rise.

Well our consumption just went down. This may help to offset what we lost last year.

[budmag06]

"Retail Sales Drop" Why? Oil prices that lead to higher shipping costs are driving up prices and fear about Obama's economy of massive spending and taxation.

[reality42]

The price of gas jumping up 70 cents a gallon doesn't help.
Posted by rsoxfan1123

No that doesn't help one bit. Gas going back over $2 a gallon has people worried about another hike that will hit the $4 mark.

No problem i pay $4.00 a gallon all the time and other parts of the world pay more then that. America has the cheapest price of gas then 90% of other countrys so now the world sees it as leveling the playing field.
Al the greed and corruption in the markets and wall street have opened the eyes of the world. Like Obama says ---Time for change --- and change is happening now ---we are living it

[whitemale08]

HEY WALL STREET...NOBODY IS BUYING YOUR B_LLSH_T ANY MORE!

How 'bout that for a reason.

...the nerve of these clowns after all of this stupid bail out money.

[brianbwb-2009]

Posted by AmericaGetsChumpChange

Either the government does it, and we have revenue that we could use for vital infrastructure modernizing and upgrading, (provided we fight the corruption) or the private companies you worship will do the same, but the money will simply disappear into their pockets, to be spent in slave labor countries.

Either way, you are going to get hit, I say at least put into public coffers, where at least we have the right to fight corrupt officials for it.

[ianlou]

I buy everything I need at Walmart, Cosco or garage sales.
I always have.
I'm 50 and I've never bought a NEW house, car, boat, camper or motorcycle in my life - all used.
If I was layed off, I could pay all my current bills with the unemployment check.
I haven't had a credit card balance for 25 years.
My humble home will be payed off in three years.

I suppose my lifestyle is Un-American... oh well..........

[Hermit1948]

I simply cannot afford anything more than bare-bones consumables in this terrible economy. The stimulus thingy is NOT working. Try something simple--like keeping gasoline, diesel, propane, LNG and electricity nice and cheap.

[debinok1]

The price of gas jumping up 70 cents a gallon doesn't help.
Posted by rsoxfan1123

No that doesn't help one bit. Gas going back over $2 a gallon has people worried about another hike that will hit the $4 mark.

[debinok1]

Retail Sales Drop Puts Crimp In Recovery
{{{{Unexpected Decline Raises Questions About Consumer Demand}}}}

Unexpected? They didn't EXPECT spending to drop like a rock after all of the layoffs, and people afraid of being laid off. They EXPECTED people to keep spending money they do not have? The first two months showed gains, WELL DUHHHHH, people that had tax refunds coming spent them on things they NEEDED. Once that money was gone they quit spending. GEESH. Have any of these people ever taken a econ class? They should try it sometime, then they might actually understand what is going on.

[rsoxfan1123]

The price of gas jumping up 70 cents a gallon doesn't help.

[ddaryl1]

I'm still searching for more things in my budget to slash. I have no faith in our economy... the bottom line is I do not make enough money to be able to handle healthcare costs, household costs, and allow myself to buy gratuitous items, while actually preapring for a chance at retirement...

there is a serious flaw in our society, and unfortunately I have to save as much money as I can to be able to survive it. Not just now but every few years we have a major downturn and I lose my job and all the security I worked hard to stash. I simply must save my money for surviving not for helping the economy