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US retail sales will continue to plummet, economists predict
By Shobhana Chandra |
March 9, 2009, Monday
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Print Edition
Print Edition
ECONOMISTS expect retail sales in the United States will have fallen in February - the seventh drop in eight months - when figures are released by the Commerce Department this week as soaring unemployment battered consumers.
The median estimate of economists surveyed by Bloomberg News was a fall of 0.5 percent. More figures due this week may show that the trade gap shrank in January as Americans bought fewer goods made abroad.
As home values plunge and the jobless rate climbs, consumers are spending less and forsaking purchases of expensive items such as cars.
"The headwinds are coming from everywhere," said Jonathan Basile, an economist at Credit Suisse Holdings. "Persistent job losses and reports of pay cuts have become embedded in consumer expectations and they think that incomes are going to shrink."
A Labor Department report last week showed that 651,000 jobs were lost in February and the unemployment rate jumped to 8.1 percent, the highest level since December 1983. Job losses have now exceeded 600,000 for three straight months, the first time that has happened since records began in 1939.
Wal-Mart doing fine
President Barack Obama's stimulus plan aims to create or save 3.5 million jobs but the nation has now already lost 4.4 million since the recession began in December 2007.
Bucking the trend, though, is Wal-Mart, the world's largest retailer, which last week reported that sales at stores open at least a year rose 5.1 percent in February as cash-strapped shoppers sought cheaper necessities such as gasoline and groceries.
"It's almost like a significant percentage of consumers realize that they might have been living beyond their real means," said Eduardo Castro-Wright, from Wal-Mart.
Other retailers didn't fare as well. Retailers from Macy's Inc, the second-biggest US department-store company, to Gap Inc, the largest US apparel chain, and luxury seller Saks Inc reported declines.
The median estimate of economists surveyed by Bloomberg News was a fall of 0.5 percent. More figures due this week may show that the trade gap shrank in January as Americans bought fewer goods made abroad.
As home values plunge and the jobless rate climbs, consumers are spending less and forsaking purchases of expensive items such as cars.
"The headwinds are coming from everywhere," said Jonathan Basile, an economist at Credit Suisse Holdings. "Persistent job losses and reports of pay cuts have become embedded in consumer expectations and they think that incomes are going to shrink."
A Labor Department report last week showed that 651,000 jobs were lost in February and the unemployment rate jumped to 8.1 percent, the highest level since December 1983. Job losses have now exceeded 600,000 for three straight months, the first time that has happened since records began in 1939.
Wal-Mart doing fine
President Barack Obama's stimulus plan aims to create or save 3.5 million jobs but the nation has now already lost 4.4 million since the recession began in December 2007.
Bucking the trend, though, is Wal-Mart, the world's largest retailer, which last week reported that sales at stores open at least a year rose 5.1 percent in February as cash-strapped shoppers sought cheaper necessities such as gasoline and groceries.
"It's almost like a significant percentage of consumers realize that they might have been living beyond their real means," said Eduardo Castro-Wright, from Wal-Mart.
Other retailers didn't fare as well. Retailers from Macy's Inc, the second-biggest US department-store company, to Gap Inc, the largest US apparel chain, and luxury seller Saks Inc reported declines.
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