Business: Retail sales see surprising drop

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By JEANNINE AVERSA, Associated Press

WASHINGTON (December 13, 2000 8:44 a.m. EST http://www.nandotimes.com) - The government reported Wednesday that sales by the nation's retailers fell by a surprising 0.4 percent in November, led by the biggest drop in auto sales in more than two years.

Last month's decline marked the weakest performance since retail sales dropped by 0.5 percent in April, the Commerce Department reported. Many analysts had expected sales to rise slightly.

In September, sales were flat, according to revised figures. The government previously reported a 0.1 percent increase.

The holiday shopping season, meanwhile, hasn't given retailers a lot to cheer about. Mall traffic is down and sales are soft. Merchants also worry that the big snowstorm raking the Midwest will hurt sales.

Lackluster sales in November dovetailed with a decline in consumer confidence, which fell to its lowest level in more than a year.

The Federal Reserve has raised interest rates six times since June 1999 with the goal of slowing the economy enough to keep inflation in check but not so much as to cause a recession.

Many economists expect the Fed will leave interest rates unchanged when it meets next week. Fed Chairman Alan Greenspan signaled last week that the Fed stands ready to cut interest rates if the economy show signs of slipping into a recession.

Economists say they are virtually certain the Fed at its Tuesday meeting will change its policy statement away from a tilt toward raising interest rates to a neutral stance. That stance would assume the risks of inflation are no greater than the risks of the economy's stalling.

Sales of new cars and trucks fell by 2.2 percent in November, the biggest decline since a 4.9 percent decrease in July 1998. In September, sales of autos decreased by 1.0 percent.

Sales of all durable goods, items expected to last three or more years, went down by 1.1 percent, following a 0.6 percent decline.

Excluding the decline in autos, retail sales rose by 0.2 percent, half the size of September's 0.4 percent increase.

Sales at hardware stores and building supply centers rose a slim 0.1 percent in November after a sizable 1.4 percent rise.

At furniture stores, however, sales rose by a strong 1.5 percent last month, following a scant 0.1 percent gain the month before. And, sales at clothing stores rose by 0.8 percent, double the 0.4 percent increase reported in September. Department store sales grew by a modest 0.2 percent following a 0.4 percent gain.

Gasoline stations saw sales rise by 0.3 percent, down from a a 0.5 percent rise in September as prices at the pump moderated. The retail sales figures are adjusted for seasonal variations but are not adjusted for inflation.

Sales at restaurants and bars rose 0.2 percent last month after posting a 0.2 percent decline in September.

At drug stores, sales fell by 0.4 percent in November, following a strong 1.6 percent gain.

http://www.nandotimes.com/no_frames/business/story/0,4461,500289533-500458604-503029618-0,00.html

-- Martin Thompson (mthom1927@aol.com), December 14, 2000

Answers

These figures only confirm what many people suspected earlier this month when retailers began promoting holiday sales, discounts, and bargain weekends well before the end of the season. I suspect that the after-Christmas sales will be great for consumers and blood in the street for retailers. Hmmm, is this how recessions start?

-- Cash (cash@andcarry.com), December 14, 2000.