Retail Sales Post an Unexpected Decline
A drop in sales for the second straight month raises questions about the strength of recovery in consumer spending
Retail sales fell in April, the second straight month of declines. The news dashes hopes that the falloff in consumer spending has bottomed out as recession-battered shoppers remain reluctant to open their wallets. The seasonally adjusted decline of 0.4% in U.S. retail and food services reported by the Commerce Dept. was worse than expected and follows a decline in March that was revised downward to 1.3%
The unexpected decline—analysts had expected flat sales—was especially jarring because retailers had hoped that gains in retail sales in January and February were the initial sign of stabilization in consumer spending, the main component of U.S. economic activity. As recently as last week, small gains reported by major retailers were being examined for signs of increased consumer confidence, and it’s still possible the two-month downturn is just a blip in a larger trend.
“Overall, the report is much weaker than expected and casts doubt on the resilience of the consumer, and thus should temper much of the recent market confidence,” Standard & Poor’s analyst Beth Ann Bovino wrote.
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