bank run blog

The Commerce Department reports that retail sales fell in July, the decline in sales was the first drop seen in five months. Reuters writes the government stimulus package of so-called “tax rebate” checks may have helped to boost consumer spending during the month of June, “but their influence appears to have petered out by July.” Consumer spending makes up more than two-thirds of the US economy.

The White House says high fuel prices are among the factors creating “substantial headwinds faced by households” that bought fewer automobiles last month, causing the drop in consumer spending. Commerce reported that sales at auto dealers and parts stores dropped 2.4 percent.

Bloomberg said that consumer spending “is likely to keep fading as a boost from tax rebates wanes and households try to cope with job losses and house-price declines.” Bloomberg quoted an executive of the Manufacturer’s Alliance who believes;

“A whole host of factors – unemployment growing, wages flat to stagnating, the wealth effect of lower house prices and stock prices – all are conspiring to forecast, I think, weaker sales ahead.”

One bright spot in the retail sales numbers was in the sale of gasoline since last year at this time. Although the American Petroleum Institute reported that gasoline use has declined by more than 2 percent since last year at this time and the Federal Highway Administration said that Americans drove 12.2 billion fewer miles this June compared to last year, the rise in gas prices pushed sales up by 0.8 percent over last years figures.

see stories-
Bloomberg : U.S. Economy: Retail Sales Fell in July, Led by Autos
Associated Press : Retail sales drop for first time in 5 months
Reuters : Check Out Line: The short-lived tax rebate boost