For the third consecutive month, retail sales fell as demand waned for everything from cars and electronics to building material, another telling sign that the U.S. economy may be slipping back into a recession.
The Commerce Department reported Monday that retail sales dipped 0.5% in June, much less than analysts' forecasts of a 0.2% rise. The decline marked the first time retail sales had fallen for three straight months since late 2008, near the height of the Great Recession.
Most noticeable in the rash of declining sales was the 0.6% drop in motor vehicles and parts, an area that was widely expected to show an uptick.
Also showing a sharp slump were receipts for electronics and appliances which fell 0.8%. Sales of building materials sagged 1.6%, and receipts at gasoline stations dried up some 1.8% even while gasoline price fell during the month.
The report adds more fodder to the lingering hope that the Federal Reserve could launch another round of quantitative easing.
The dismal commerce numbers also add to the recent wave of weak economic data.
On Monday, the International Monetary Fund (IMF) cut is forecast for global economic growth and urged European policy makers to take more aggressive measures to curtail their crisis, while cautioning that China's economy is at risk for taking a hard fall.
Meanwhile, Reuters reported a poll released on Monday that revealed American companies have tempered any plans to hire workers, while a growing number of firms believe the mess in Europe is hurting sales. The poll showed nearly half (47%) of companies polled believe their sales have suffered thanks to the Eurozone debt crisis.
Recession 2013: An Ongoing Slide?
While economists continue to voice their concerns that the looming fiscal cliff is bound to throw America into a recession, the Economic Cycle Research Institute in America says we are already in one.
The ECRI points out that the U.S. economy experienced outright contraction in the second quarter amid slumping job growth, weak retail sales, dismal broader trade sales and a moribund housing market.
"I think we're in recession already," Lakshman Achuthan, co-founder of the ECRI told Bloomberg TV. "It's very rare that you know you're going into recession…It often takes some big hit on the top of the head," he continued, adding that recessions don't always have to be near Armageddon like collapses such as the one that reared its ugly head in the U.S. in late 2008. But the signs are clear and hard to miss.
Achuthan's claim that we are already in a recession deviates from the median forecasts of economists surveyed by Bloomberg which expects an annual growth rate of 2.2% this quarter and the next.
Still according to Blomberg , Achuthan is on to something.
As Bloomberg points out, factory output is declining, industrial production has dipped, manufacturing activity is dropping and consumer spending has stalled.
What's more, even though GDP did grow in the first quarter, it is not a compelling indicator of the direction the economy is headed. For example, GDP grew in the last quarter of 2007, even as the worst recession since World War I began in December of that quarter.
"Evidence is increasingly clear that the U.S. economy is slowing" Jim Baird, an investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan, told Reuters.
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