U.S. retail sales fell 1.2 percent last month, the steepest drop in eight months, the Commerce Department said in a report that raises new questions about the durability of the economic recovery
Consumer spending accounts for 70 percent of U.S. economic output and accounts for a large share of containerized imports and domestic shipments, both of which have been increasing from last year’s depressed levels.
The Commerce Department said auto sales were down 1.7 percent after an 0.6 percent increase in April. The May decline in auto sales was the biggest since a 2.5 percent drop in February.
Excluding autos, sales fell 1.1 percent in May.
Department store sales fell 1.8 percent while sales in the broader category of general merchandise stores, which includes big retailers such as Wal-Mart, fell 1.1 percent.
Sales at hardware stores fell 9.3 percent, a drop attributed to the end of the homebuyer tax credit which boosted home sales this spring.
Gasoline stations sales were down 3.3 percent, reflecting lower gasoline prices.
Economists said the retail sales report raises fresh questions about the durability of the economic recovery, which is being slowed by high unemployment rates, tighter credit and a weak housing market.
The Federal Reserve reported Thursday that households' net worth rose for the fourth consecutive quarter, but economists say it may not be until 2012 or 2013 at best before Americans' wealth returns to its pre-recession levels.
The overall GDP grew at an annual rate of 3 percent in the first three months of this year with much of that growth reflecting a 3.5 percent expansion in consumer spending.
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