Retailers reported a rough month in July, raising concerns for how strong the recovery from the worst recession since World War II. Outside of auto sales figures, boosted by the very popular and well publicized “Cash for Clunkers” program, retailers turned in a disappointing performance in July. The Commerce Department reported retail sales fell 0.1 percent last month, a much worse performance than economists had expected.
Sales unexpectedly lower
Retail sales had been expected to rise in July, boosted by the federal government’s “Cash for Clunkers” program. Most economists expected a very slight increase in non-auto retail for July, so the 0.1 percent drop came as a surprise.
Shoppers still hesitant to open wallets
Reports from the nation’s major chain retailers showed shoppers remained cautious about spending in July, as most consumers aren’t feeling like they’ve seen the last of the recession, and job security fears dominate peoples thinking. The next hurdle for retailers will be whether shoppers will cut back on back-to-school shopping. This could be a indicator of how good the holiday season will be for retailers. Congress approved an additional $2 Billion for “Cash for Clunkers”, and retailers are hoping some of the popularity of that program will spill over into enthusiasm for spending at retail stores. Cars and light truck are selling at the best rate since last September, boosted by the government program.
Unemployment expected to climb
Economists are forecasting that the unemployment rate, which dipped to 9.4 percent in July, will rise to over 10 percent early next year. The Federal Reserve, concluding its first meeting since the economic uptick, held a key interest rate near a record low where it has been since last December and pledged to hold rates at low levels for "an extended period
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