By Jason Simpkins
U.S. retail sales fell 2.7% last month and will likely continue on a downward trend as job losses mount.
Total retail sales dropped to a seasonally adjusted 343.2 billion last month, the Commerce Department reported. That's a decrease of 2.7% from the previous month and 9.8% decline from December 2007.
Retail sales have now declined for six straight months – the longest streak on record – as falling home values, tight credit conditions and soaring unemployment have sent consumers into a full scale retreat that is showing no signs of letting up.
The U.S. unemployment rate rose to 7.2% in December, as the economy lost 2.6 million jobs last year, the most since World War II ended in 1945. The Conference Board's consumer confidence index declined to a new all-time low of 38.0 in December, down from 44.7 in November.
"The economy is staring at a very steep, downward trajectory," Jim Demasi, chief fixed-income strategist at Stifel Nicolaus & Co., told Reuters. "This shows a very sharp falling in household wealth and job creation. This shows a shock in consumer confidence."
Sales at clothing stores fell 2.5% in December and sales of sporting goods slid 0.4%. The declines in both apparel categories, as well as a 2.2% drop in same-store sales over the final two months of the year, confirmed reports that the 2008 holiday shopping season was the worst in since World War II.
Overall retail sales were also dragged lower by a 15.9% drop in gasoline prices, which have fallen off a cliff since hitting a record high $4.114 a gallon in July of last year. The national average for regular gasoline is now stands $1.792 a gallon according to auto-service AAA. The decline in gas prices in indicative of a similar drop in the price of crude oil, which is down 75% from its record high of $147 a barrel, also reached last July.
The decline in commodity prices across the board that has resulted slumping global demand is also driving down the prices of U.S. imports.
The Labor Department's import-price index fell 4.2% in December after a revised 7.0% decline in November. The index posted a year-over-year decline of 9.3% – the largest such decline since the index's 1982 inception.
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ADVANCE MONTHLY SALES FOR RETAIL TRADE AND FOOD SERVICES