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US Retail Sales Dropped below the Predicted Value for the Month
May 02, 2008

The US retail industry failed to sustain its growth achieved in December last year and fell by 0.6% in February 2008 due to declining home prices and tight credit practices.
 
According to the US Commerce Department, the US retail industry’s sale dropped significantly by 0.6% in February 2008 against 0.2% predicted by the industry experts, as reported by Xinhuanet.
 
The Department also highlighted that the recent slump in the retail industry followed a 0.4% growth in January 2008. Similar drop was witnessed in December 2007 when sales fell by 0.7%, highest since June 2007.
 
As per the industry experts, spiraling prices of gasoline that touched a record high of $3.27 per gallon for unleaded regular, forcing American consumers to cut down on their spending. Including this, unemployment figure reached 2.835 Million in the week ended on March 1, 2008, highest figure since September 2005.
 
Besides, the country is paying hugely for buying energy from foreign countries indicating shortage of energy resources and higher energy costs in the country. As a result, people are stopping themselves from making purchases. Household expenses also came down to compensate the loss in wealth and lenders have tightened their methods of credits giving.
 
Moreover, according to the industry experts, the home prices in the US are declining which in turn is contributing to the present economic crisis in the country. It is also expected that deterioration in the housing market of the country will worsen in future. Poor credit conditions in the US are also responsible for the present crisis in its retail market.
 
Also, the predictions of low interest rates in coming months are keeping the dollar on its downward movement, taking it to the lowest level against the Yen and Euro in more than a decade.
 
According to a Research Analyst at RNCOS, “Poor financial conditions and economic recession are the main reasons for decline in the US retail industry. Consumers reduced their spending, the main driver of the US economy, pushing the world’s biggest economy into the recession. Now the time has come when the government should take some necessary measures to boost up the dwindling retail industry. Cut down in interest rates could be an effective medium to encourage customers for enhancing their spending.”

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