Retail sales in the US during August 2008 proved experts’ predictions wrong and dropped considerably due to high inflation, weak credit market and rising unemployment.
The Commerce Department of the US disclosed that retail sales in August 2008 thwarted the expectations of moderate rise and dropped drastically, as reported by bizjournals.
The US retail industry sales slumped 0.3% in August 2008 from 0.5% in previous month (July 2008) though economists were expecting a rise of 0.3%. The retail sales slumped 0.7%, worst since December 2007, excluding the automobile industry. Sales at clothing stores and electronics and appliances fell 0.3% and 1.3% respectively in August 2008. Besides, the sales at gasoline stations plummeted 2.5% during the same month. Department and building material selling stores also experienced low sales, while the sales at furniture and furnishing stores remained flat.
The retail industry in the US is facing tough time because of high inflation that increased the prices of food and fuel, forcing consumers to increase expenditure on their basic necessities. Sub-prime crisis in the country has aggravated credit crunch, which severely hampered the retail sales.
Moreover, job cuts in the country in the wake of slow economic growth is one of the key reasons for low retail sales as unemployed people cannot afford to spend more. In addition, slow growth in the housing industry has negatively affected the retail industry, and low sales at gasoline stations on account of dropping gas prices have declined the retail sales.
The fall down in the US retail industry sales below expectation last month is pointing that the economy could go into recession. Moreover, industry experts believe that the consumer spending and demand for retail products might fall down further in coming months as business conditions are unlikely to change.
According to a Research Analyst at RNCOS, “The US retail sales are falling due to unfavorable business conditions. It will also affect the country’s economic growth adversely as it’ll contribute less to the GDP. Moreover, retailers are suffering from low sales; therefore, they should offer attractive discounts to boost sales. Also, financers should cut down credit rates so that the people can afford spending on retail products.”
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