 The Commerce Department says that spending fell 1.2 percent last
month. Auto sales were down 1.7 percent, but there was weakness in a
number of areas. Excluding autos, sales fell 1.1 percent.
The big decline cast new doubts about the strength of the
economic recovery. Consumer spending accounts for 70 percent of
total economic activity. Economists are concerned that households
will start trimming outlays as they continued to be battered by high
unemployment and a swoon in stock prices.
Investors have sold off stocks for more than a month because of
concerns that Europe's sovereign debt crisis will slow a worldwide
economic rebound. The Dow Jones industrial average fell 7.9 percent
last month, the worst May for the blue chip index since 1940.
The 1.2 percent decline in May sales was the largest decline
since sales had fallen 2.2 percent in September. Analysts had been
forecasting sales would be weak but remain in positive territory.
For May, the 1.7 percent drop in auto sales followed a 0.6
percent increase in April sales and was the poorest showing in this
category since a 2.5 percent February decline.
Sales at hardware stores plunged 9.3 percent. That could reflect
an impact from the end of the homebuyer tax credit, which had
spurred home sales earlier in the spring.
Department store sales fell 1.8 percent, while sales in the
broader category of general merchandise stores, which includes big
retailers such as Wal-Mart, fell 1.1 percent.
Gasoline stations sales were down 3.3 percent, a drop that
reflected in part lower gasoline pump prices during the month.
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The Federal Reserve reported Thursday that households' net worth
rose for the fourth consecutive quarter, but since then stock prices
have been tumbling. Economists say it may not be until 2012 or 2013
at best before Americans' wealth returns to its pre-recession
levels.
Last week, the International Council of Shopping Centers reported
that its index for revenue at stores open at least a year posted a
2.6 percent rise in May compared with sales in May 2009. That
followed a 0.8 percent April increase and a 9 percent surge in
March.
Target Corp. posted a small gain in May that was below internal
forecasts, while department store chain J.C. Penney Co. and many
teen merchants, including Abercrombie & Fitch Co. and American Eagle
Outfitters Inc., reported declines in revenue at stores open at
least a year.
The overall economy, as measured by the gross domestic product,
grew at an annual rate of 3 percent in the first three months of
this year, with much of that growth reflecting a 3.5 percent
expansion in consumer spending, the best showing for this category
in three years.
[Associated Press;
By MARTIN CRUTSINGER]
Copyright 2010 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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