Economy still vulnerable as retail sales fall
The recession is easing? Not so fast. An unexpected drop in sales of just about everything from cars to clothes sent a sobering message Tuesday: The economy is still vulnerable.
With Americans still losing jobs, a major fear is that people will cut back even further on spending, and that could plunge the economy into a sharper tailspin. Tuesday’s report that retail sales fell 1.1 percent in March deepened concern.
The economy shrank at a 6.3 percent rate in the final three months of 2008, its worst showing in a quarter-century. Some estimate it fared about as poorly in the first three months of this year; others estimate a 4 percent to 5 percent rate of decline. The government will release its initial estimate at the end of April.
A big drop in auto sales led the March decline in retail sales. Business was way down at clothing, appliance and furniture stores, too quick cash.
Still, analysts say there’s reason to hope. Shoppers’ appetites should get a lift from the tax credits of $400 per worker and $800 per couple in the government’s $787 billion economic stimulus package. Most workers in April started seeing a $10 bump in their weekly paychecks.
As for the March sales decline, some analysts didn’t think it was as bleak as it looked. Part of the decrease was simply because prices have fallen, depressing sales totals.
Some analysts said they remain hopeful the economy actually will start to grow again later this year, possibly in the final quarter.