Rising unemployment, falling home prices are making shoppers cautious
Frugal shoppers cut back again in August, driving down sales at the nation’s retailers for the second month in a row, further proof the economy is losing traction.
The Commerce Department reported Friday that retail sales dropped by 0.3 percent last month. Economists expected sales to rise by 0.3 percent.
Sales in July also turned out to be even weaker than previously thought, falling by 0.5 percent, the worst showing in five months.
Rising unemployment, strained household budgets and falling home prices — which make homeowners feel less wealthy — are making shoppers more cautious.
Stripping out auto sales, which were strong in August, sales at all other merchants fell by 0.7 percent, the worst showing since December. That figure also was sure to disappoint economists, who were calling for a smaller, 0.2 percent dip.
Cutbacks were widespread.
Sales fell at electronics and appliance stores, clothing shops, building and garden stores, and department stores. Gasoline sales also dipped as prices retreated. Sales at furniture and home furnishing stores were flat. Those losses swamped gains elsewhere, including auto dealers, sporting goods, books and music stores, grocery stores and health and beauty shops.
Removing sales at gasoline stations, all other sales would have been flat in August.
Last week, many stores reported weak sales for August. The few bright spots: Wal-Mart Stores Inc., the world’s largest retailer, and Costco Wholesale Corp., where shoppers focused on low prices.
Many analysts predict shoppers will lose steam in the months ahead, slowing overall economic activity.