Americans Tightening the Purse Strings
It looks like consumers are concerned about the weak job market, so their not spending as much.
The Commerce Department says retail sales fell 0.5 percent in June, falling for the third straight month. Consumers spent less on vehicles, furniture, appliances, on building and garden supplies and at department stores.
"However hard you look, there's just no good news in this report at all," said Paul Ashworth, chief U.S. economist at Capital Economics. Retail sales haven't fallen for three straight months since the fall of 2008, at the height of the financial crisis. Sales were still 4.7 percent higher in the April-June period than in the same period of 2011. Retail sales don't include spending on services, which represents a larger portion of the economy.
Some of the weakness in recent months reflects falling gas prices. But, even excluding sales at gas stations, retail spending fell 0.3 percent in June from May. "Recent weak jobs data have certainly done nothing to alter our view that consumer spending growth will be very modest at best in the quarters ahead," said Joshua Shapiro, chief U.S. economist at MFR,Inc. "A silver lining in the economic clouds is that lower gasoline prices are helping to cushion the consumer."
Hiring has slumped this spring and wages have barely kept pace with inflation. As a result, budgets are tight and consumers have pulled back sharply on their spending, which drives 70 percent of economic activity.
The Associated Press contributed to this report