Consumer confidence, retail sales fall

By JEANNINE AVERSA

Associated Press

WASHINGTON — Sales by the nation’s retailers fell by a surprising 0.4 percent in November, led by the biggest drop in auto sales in more than two years.

Last month’s decline marked the weakest performance since retail sales dropped by 0.5 percent in April, the Commerce Department reported Wednesday. Many analysts had expected sales to rise slightly.

In October, sales were flat, according to revised figures. The government previously reported a 0.1 percent increase.

The holiday shopping season, meanwhile, hasn’t given retailers a lot to cheer about. Mall traffic is down and sales are soft. Merchants also worry that the big snowstorm raking the Midwest will hurt sales.

Lackluster sales in November dovetailed with a decline in consumer confidence, which fell to its lowest level in more than a year.

The Federal Reserve has raised interest rates six times since June 1999 with the goal of slowing the economy enough to keep inflation in check but not so much as to cause a recession.

Many economists expect the Fed will leave interest rates unchanged when it meets next week. Fed Chairman Alan Greenspan signaled last week that the Fed stands ready to cut interest rates if the economy show signs of slipping into a recession.

Economists say they are virtually certain the Fed at its Tuesday meeting will change its policy statement away from a tilt toward raising interest rates to a neutral stance. That stance would assume the risks of inflation are no greater than the risks of the economy’s stalling.

The weakening consumer demand has been blamed on a variety of factors, including higher interest rates, which makes borrowing more expensive; volatility in the stock market, which takes a dent out of consumers’ investment portfolios; and higher fuel prices, which means consumers have less to spend on other items.

Sales of new cars and trucks fell by 2.2 percent in November, the biggest decline since a 4.9 percent decrease in July 1998. In October, sales of autos decreased by 1.0 percent.

Paul Taylor, chief economist for the National Automobile Dealers Association, said the decline, which represents a drop in the value of sales, reflects more sales of less expensive, smaller cars.

Sales of all durable goods, items expected to last three or more years, went down by 1.1 percent, following a 0.6 percent decline.

Excluding the decline in autos, retail sales rose by 0.2 percent, half the size of October’s 0.4 percent increase.

Sales at hardware stores and building supply centers rose a slim 0.1 percent in November after a sizable 1.4 percent rise.

At furniture stores, however, sales rose by a strong 1.5 percent last month, following a scant 0.1 percent gain the month before. And, sales at clothing stores rose by 0.8 percent, double the 0.4 percent increase reported in October. Department store sales grew by a modest 0.2 percent following a 0.4 percent gain.

Gasoline stations saw sales rise by 0.3 percent, down from a a 0.5 percent rise in October as prices at the pump moderated. The retail sales figures are adjusted for seasonal variations but are not adjusted for inflation.

Sales at restaurants and bars rose 0.2 percent last month after posting a 0.2 percent decline.

At drug stores, sales fell by 0.4 percent in November, following a strong 1.6 percent gain.