WASHINGTON -- U.S. consumers put their wallets away the past two months after a winter spending spree -- a sign that the economic slowdown for which Federal Reserve policy-makers have been looking may finally be here.
Retail sales fell 0.3 percent in April after a poorer performance in March than previously reported, leading to an overall sales level last month that was lower than expected, the Commerce Department reported yesterday. Sales fell in April, even once sluggish auto sales are excluded.
"The Fed at the moment is forecasting a slowing in demand pressures and April retail sales confirm that slowing process," said David Jones, chief economist at Aubrey G. Lanston & Co. in New York. "I expect they will decide not to tighten further at their May meeting."
In a speech last week, Federal Reserve Chairman Alan Greenspan hinted that, together with his colleagues, he might refrain from raising the overnight bank lending rate target beyond 5.50 percent at their meeting next Tuesday if he saw signs that growth was cooling down.
April sales were dragged down by poor demand for products ranging from cars to clothes, the government report showed. The only category that posted an increase last month was restaurant sales -- or "eating and drinking places," as the Commerce Department calls them.
The April drop, combined with the revisions to March's sales performance, pushed overall April sales to $212.241 billion for the month, adjusted for seasonal variations. That's down from March's revised sales level of $212.965 billion, and below the $212.780 billion analysts expected.
Overall March sales showed virtually no change from February levels. In previously revised figures, the Commerce Department had estimated that March retail sales increased 0.1 percent.
And even as they declined in April, sales excluding autos rose only 0.1 percent in March, instead of the 0.5 percent gain originally reported. Still, some economists and retailers are betting that April's drop in sales will be temporary. They say sales sputtered because poor weather kept shoppers away from their stores, an early Easter put holiday-related purchases on the March tally and car promotions earlier in the year took a bite out of April demand.
Consumer spending, which accounts for two-thirds of economic growth, propelled the economy to a 5.6 percent annual rate during the first three months of the year.
"The economy is in an extraordinarily strong position," said Clark Johnson, chairman and chief executive officer at Pier 1 Imports Inc. "We just think we're going to continue to see solid, steady growth."
Pub Date: 5/14/97