US retail sales fall fifth month in row

By Timothy R. Homan  |   2008-12-15  |     NEWSPAPER EDITION

RETAIL sales in the United States fell for a record fifth consecutive month in November and wholesale prices tumbled.

The 1.8-percent decline in sales was smaller than forecast because discounts drew in more shoppers at department stores and electronic retailers, Commerce Department figures showed in Washington. Still, a record dent in household wealth means consumers will likely retreat further in December, analysts said.

Car sales fell for the ninth time in 10 months, according to the report, underscoring calls for a government bailout for General Motors Corp and Chrysler LLC. The fall in consumer spending helped spark a fourth straight monthly retreat in wholesale prices in November, a separate report showed, giving the Federal Reserve further room to pump cash into the economy.

"If retailers are willing to sell at a loss, consumers are willing to buy," said Joshua Shapiro, chief US economist at Maria Fiorini Ramirez Inc in New York.

"As we get into next year it'll become more and more evident that the consumer is a big weight on economic growth," he said, predicting that "the consumer goes into hibernation for a while" after Christmas sales.

Purchases at department stores rose by the most in three years as Americans took advantage of discounts by retailers, from Toys R Us to Neiman Marcus Group, to start shopping for the holidays. Wal-Mart Stores Inc said it beat its own forecast for November sales.

"You wouldn't start feeling comfortable about consumer spending until you start feeling more comfortable that the declines in payrolls were abating," said Michael Feroli, an economist at JPMorgan Chase & Co in New York.

"Some of the declines in the labor market unfortunately may be with us a little longer than the decline in gas prices."

The loss of almost 1.3 million jobs since August and record declines in home values foreshadow further declines in sales.