June 14, 2009
Retail sales were still 9.6 percent below their levels from last year, and economists said that consumer spending, while stabilizing, was not likely to come roaring back this year. Consumers were saving more of their income and spending less as they worried about the prospect of rising unemployment and wage cuts.
Also on Thursday, the Labor Department reported that first-time jobless claims fell more than expected last week in a continuation of some marginally better indications from the job market. Claims for unemployment insurance fell 24,000, to a seasonally adjusted 601,000.
Last week, the government reported that 345,000 jobs vanished in May, a stark figure but a much slower pace of job losses than months earlier, when as many as 741,000 jobs were lost in a single month. Economists still expect businesses to continue cutting jobs for much of this year, but at a declining pace.
“The underlying tone of consumer spending remains weak, and while the steep declines in consumer spending seen over the second half of 2008 have been arrested, sales have at best stabilized at a low level,” Richard Moody, chief economist at Forward Capital, wrote in a research note.
As income growth dwindles and the recession lingers, consumers are cutting nonessential spending from their budgets, as evidenced by continued declines in luxury purchases and sliding sales at high-end retailers, economists say.
“It’s still in search of the bottom,” Michael P. Niemira, chief economist of the International Council of Shopping Centers, said of the retail market.
A gauge of how businesses are adapting to the recession and lower levels of consumer demand showed that companies continue to slash their inventories. The government reported Thursday that business inventories fell 1.1 percent in April from a month earlier, their eighth consecutive month of decline.
For further information, visit: http://www.nytimes.com/2009/06/12/business/economy/12econ.html