Anthony McGill Retail_spending_down August 4, 2012

US shoppers cut their spending at retail stores for the third month in a row, as a weak job market has made consumers more cautious. This report caused some analysts to downplay their expectation of growth between the April-June quarter. Many think the economy grew less than it did in the first quarter of the year when it expanded at a slow rate of 1.9 percent annually. Junes retail spending fell in nearly every category from appliances, furniture, and autos, to building, garden supplies and department stores. The Commerce Department said retail sales dropped 0.5 percent from May to June. Retail sales have not had a three-month streak of decrease since 2008 at the height of the financial crisis. Bowling Green Wal-Mart store manager, Tom Keris said, Weve suffered a small loss in sales during the last few months, but nothing that would warrant any layoffs. The weak reports were announced the same day that the International Monetary Fund lowered its expectations for global growth over the next two years. Lowered retail spending could make the Federal Reserve lower long-term interest rates to encourage borrowing and spending. However, retail sales were still 4.7 percent higher in April-May than in the second quarter of 2011. Retail sales also do not include service spending which represents a large portion of the economy.

Paul Ashworth, chief U.S. economist at Capital Economics said that economic growth slowed to an annual rate of 1.5 percent during the second quarter. Those numbers arent enough to lower a high unemployment rate. The U.S. unemployment rate is currently 8.2 percent. Weve definitely noticed a hit in sales this summer but thats pretty common when the students are gone. Sometimes its hard to compare local and national numbers because of the different circumstances, said Greg Hallamay, owner of Finders Records in Bowling Green. Some of the pain was eased by a separate Commerce report that companies added to their stockpiles in May. When businesses increase restocking, they tend to order more goods which means more factory production and economic growth. The decline in retail sales reflects, partly, falling gas prices. Despite the lower prices, retail sales still fell 0.3 percent from May to June. As hiring has slowed, pay rates have barely kept up with inflation. As a result, consumers are more cautious about where they put their money. Retail spending drives 70 percent of economic activity.