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Retail Sales Fall as Consumers Scale Back Spending

Posted on 13 May 2009

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According to a government report on Wednesday that dealt a blow to hopes the economy was beginning to improve, sales at U.S. retailers fell for a second straight month in April as cash-strapped consumers held back on some purchases.

The Commerce Department said total retail sales slipped 0.4 percent after falling by 1.3 percent in March. Excluding motor vehicles and parts, sales dipped 0.5 percent in April, compared to a 1.2 percent decline the prior month.

Economists had expected retail sales to be flat in April.

While the pace of decline in retail sales slowed from the prior month, the report dampened expectations of a quick end to the nation's deep recession.

"I would say the likelihood is growing that second quarter consumption in the U.S. is going to be negative," said Robert Blake, senior currency strategist at State Street Global Markets in Boston.

This would deal a considerable blow to the green shoots talk and it's possible that would hit some of the recent optimism in the markets and hurt risk appetite."

"These numbers are certainly discouraging, a bit disheartening," said David Resler, chief economist at Nomura Securities in New York.