Tags: retail | sales

Retail Sales Show Biggest Drop in Five Years

Thursday, 11 December 2008 09:30 AM EST

U.S. retail sales excluding autos posted their biggest monthly drop in five years November, as consumers, spooked by a deepening recession, pared spending for a third straight month, a private report released Thursday showed.

The decline accelerated in November despite a sales spurt over the crucial "Black Friday" weekend -- the three days after the Thanksgiving holiday in late November -- according to SpendingPulse, the retail data service of MasterCard Advisors, a subsidiary of MasterCard.

Consumer spending excluding autos fell 3.8 percent last month on a seasonally adjusted basis, steeper than the 1.5 percent decline in October, SpendingPulse said.

The November figure was the largest one-month drop in SpendingPulse history, which began in 2003, surpassing the prior record fall of 2.4 percent set two months ago.

The report was the latest evidence that U.S. retailers are facing one of the worst holiday retail seasons in recent memory. The year-end shopping period accounts for the bulk of the annual business of many retailers.

"We are talking about a consumer who is wary of spending," said Kamalesh Rao, SpendingPulse's director of economic research.

Consumers, who account for more than two-thirds of the U.S. economy, have been battered by worsening job conditions, dwindling 401(k) retirement funds and a persistent credit crunch.

The spending decline was again led by a drop in gasoline sales, as pump prices have fallen well below $2 a gallon since rising above $4 in July, according to Rao.

Retail sales excluding cars and gasoline fell 1.3 percent in November compared with a 0.9 percent drop in October. Once red-hot categories like electronics, furniture and luxury goods have turned cold, registering double-digit sales drops from year ago, Rao said.

"People are a lot more price sensitive. When they buy, they buy less expensive things," Rao said.

SpendingPulse's "core" measure on consumer spending, which strips out cars, gasoline and building materials, declined 1.3 percent compared with a 1.6 percent fall in October.

While it is too early to predict when spending will pick up, the worst of the downturn may have occurred, Rao said. "Spending may have bottomed out in October. We are not seeing more a pullback," he said.

The SpendingPulse data is derived from the aggregate sales in the MasterCard U.S. payment network, coupled with estimates on all other payment methods including cash and check.

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Economy
U.S. retail sales excluding autos posted their biggest monthly drop in five years November, as consumers, spooked by a deepening recession, pared spending for a third straight month, a private report released Thursday showed.The decline accelerated in November despite a...
retail,sales
386
2008-30-11
Thursday, 11 December 2008 09:30 AM
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