Retail Sales, Whole Sale Price Index Fell Sharply

From Yahoo! Finance: Retail sales, wholesale prices fall again in Nov.

The Commerce Department reported Friday that retail sales dropped by 1.8 percent in November and 7.4% YOY. Total sales for the September through November 2008 period were down 4.5 percent from the same period a year ago. The September to October 2008 percent change was revised from -2.8 percent to -2.9 percent. The decline, which was slightly below the 1.9 percent dip that had been expected, was the fifth straight monthly drop, a record stretch of weakness.

Retail trade sales were down 2.0 percent from October 2008 and were 8.5 percent below last year. Motor vehicle and parts dealers sales were down 25.2 percent from November 2007 and gasoline stations sales were down 22.0 percent from last year.

The Producer Price Index, which tracks costs of goods before they reach consumers, fell 2.2 percent last month as gasoline and other energy prices retreated, according to the Labor Department. That followed a record 2.8 percent plunge in wholesale prices in October, and November's price drop was larger than the 2 percent decline economists expected.

Falling prices might sound good for buyers, but a prolonged, widespread decline would do serious economic damage, dragging down incomes, clobbering home prices even more and shrinking corporate profits.

The Commerce Department also said businesses slashed the inventories they hold on shelves and back lots by 0.6 percent in October, three times the 0.2 percent decline economists expected. It was the biggest cut in inventories since August 2003.

The latest economic data illustrate the negative cycle currently bedeviling the economy: consumers tighten their belts as the unemployed -- and those who fear for their jobs -- spend less, reducing retail sales and leading companies to cut back further.

Most Americans expect the jobs situation to get even worse, according to a poll released Thursday by the Pew Research Center for the People & the Press. More than 60 percent believe unemployment will increase next year, and 73 percent plan to cut back on holiday gifts this year.

Separately, the U.S. trade deficit rose unexpectedly in October to $57.2 billion, partly because of dampened demand for American exports. Analysts had been expecting a decline because of falling oil prices.

From Calculated Risk: Retail Sales Off Sharply in November