Thursday, May 15, 2003

Retail sales dip in face of joblessness

By Jeannine Aversa
The Associated Press

WASHINGTON - Worried about evaporating jobs, cautious consumers sent retail sales down slightly in April, fresh evidence that the end of the Iraq war hasn't produced a quick economic boost.

The Commerce Department reported Wednesday that sales at the nation's retailers dipped by 0.1 percent in April from the month before as consumers - the main force keeping the economy going - trimmed spending on clothing, furniture and building supplies.

"One sure way to get a consumer to cut spending is to take away his or her job or show them the unemployment lines, which are getting longer," Richard Yamarone, economist with Argus Research Corp., said.

The nation's unemployment rate jumped to 6 percent in April, and economists expect it to creep higher in coming months. The economy has lost a half-million jobs in the last three months.

In March, consumers splurged and pushed sales up by 2.3 percent. April's declining retail activity disappointed economists and suggested economic growth in the current April-June quarter got off to a lackluster start. "If we were at the Fed, we'd be sweating bullets over the lack of any postwar bounceback," David Rosenberg, chief economist at Merrill Lynch, said.

Last week, the Federal Reserve opted to hold a key interest rate at a 41-year-low of 1.25 percent with the hope that will motivate consumers and businesses to spend and invest more, helping the listless economy.

The drop in retail sales in April was exaggerated by sales at gasoline stations, which plunged 5.9 percent, reflecting lower prices at the pump. Excluding sales at gasoline stations, retail sales went up by a modest 0.4 percent in April.

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