US retail sales drop 0.4% in Dec

WASHINGTON: Frugal American shoppers cut back on their spending at the nation’s retailers by 0.4% in December, the most in six months, in a gloomy report that fanned fears of a recession.

The Commerce Department reported on Tuesday that the drop in retail sales, which followed a brisk 1% gain in November, marked the worst showing since June, when merchant sales declined by 0.8%.

Shoppers turned into penny-pinchers under the strains of a deteriorating job market, expensive energy bills and a persistent housing slump that has weakened home values and propelled foreclosures to record highs.

“Consumers held tight to their wallets in December, raising questions about whether household spending will be enough to keep us out of a recession,” said Joel Naroff, president of Naroff Economic Advisors.

In another report, the Labour Department said wholesale prices dipped 0.1% in December, but were up 6.3% for all of 2007, the biggest annual gain in 26 years, mostly reflecting higher energy costs. On Wall Street, stocks tumbled in morning trading. The Dow Jones industrials were down more than 100 points.

Excluding sales of automobiles, which can swing widely from month to month, sales at all other retailers also fell by 0.4% in December, the biggest decline since August. The report was much weaker than many economists were expecting. They were forecasting overall sales to be flat last month and for sales, excluding autos, to dip by 0.1%.