Retail sales aresucking wind.
Retail sales managed a small increase in October as consumers struggled with a steep slump in housing, tighter credit conditions and soaring energy costs.
The Commerce Department reported Wednesday that retail sales edged up 0.2 percent in October compared to the previous month. It was the weakest showing since a 0.1 percent rise in August and represented a significant slowdown from a 0.7 percent jump in September sales.
The weakness in retail sales last month reflected a 0.5 percent drop in sales at department stores, where merchants were hurt by a wamer-than-normal October which depressed sales of winter clothing.
Retailers are facing bleak prospects for Christmas with consumer confidence plunging in the face of soaring gasoline prices, slumping home sales and tougher lending standards being imposed by financial institutions in the wake of a serious credit crunch.
Analysts attributed much of the small October gain in retail sales to higher prices for gasoline and food rather than an actual increase in demand.
Ian Shepherdson, chief U.S. analyst at High Frequency Economics, said core retail sales have risen over the past three months at the slowest annualized rate in five years, since the time the country was struggling to emerge from the last recession. He predicted this weakness would intensify.
“We expect a further deterioration as consumers cut back in the face of soaring gas prices, falling stock prices and the continued disaster in housing,” Shepherdson said. “The holiday season will be terrible.”