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Retail Drops For Record 5th Straight Month

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The Associated Press

Published: December 13, 2008

WASHINGTON - Consumers cut back on spending at retail stores for a record fifth straight month in November, another sign the recession that is already the longest in a quarter-century will translate into a dismal holiday shopping season.

The Commerce Department reported Friday retail sales dropped by 1.8 percent last month. The decline, which was slightly below the 1.9 percent dip that had been expected, was the fifth straight monthly drop, a stretch of weakness never before seen on the government's retail sales records.
Auto sales fell by 2.8 percent, a decline that had been expected after automakers reported that November was their worst sales month in more than 26 years. Sales at gasoline stations were down 14.7 percent, a drop heavily influenced by the big decline in prices at the pump since record highs above $4 per gallon in the summer.

In other economic news, the Labor Department reported that wholesale prices dropped by 2.2 percent in November, marking the fourth straight monthly decline as the severe stretch of economic weakness is translating into sizable decreases in the price of energy and other goods.

A third report showed that businesses facing a record drop in sales reduced their inventories in October by the largest amount in five years, another sign the recession will force further cuts in production.

The Commerce Department reported that businesses cut inventories by 0.6 percent in October, three times the 0.2 percent decline economists expected. It was the biggest cut in inventories since August 2003.

The reduction in inventories came as business sales fell by a record 3.5 percent during October, even larger than the 2.4 percent drop in September sales, which had been the previous record.

Excluding the big drop in auto sales, retail sales would have fallen by 1.6 percent in November, a decline that was roughly in line with analysts' estimates.

Consumers have been cutting back on their spending in the face of falling home prices, a plunging stock market and rising job losses.

Analysts are forecasting that the recession will not end until next summer, making the current downturn the longest in the post-World War II period.

The record is now held by the 1973-75 recession and the 1981-82 downturn, both of which lasted for 16 months.

Sales at department stores and general merchandise stores showed an increase of 1.2 percent in November.

That performance was a surprise, given that many of the nation's big retail chains had reported poor sales results last month. However, retailing giant Wal-Mart Stores did announce a 3.4 percent gain in same-store sales in November, surpassing analysts' expectations.

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