From Roto-Reuters:
Retail sales
fell in June for the third straight month, the longest run of
consecutive drops since 2008 when the country was mired in recession.
Sales slipped 0.5 percent, with declines across a wide
swath of industries from electronics and cars to building supplies, the
Commerce Department said on Monday. Analysts had expected a small increase.
"Evidence is increasingly clear that the U.S. economy is slowing," said Jim Baird, an investment strategist at
Plante Moran Financial Advisors in Kalamazoo, Michigan.
The report adds to a spate of soft economic data that is raising pressure on
President Barack Obama
ahead of his November re-election bid. Republican challenger Mitt
Romney is focusing his campaign on the weak economy, which has plagued
Obama's presidency.
The dollar declined against the euro and the yield on
10-year U.S. government bonds dropped to an all-time low as the data
stoked worries the economy was floundering and could need more help from
the Federal Reserve. U.S. stock prices sank.
Fed Chairman
Ben Bernanke will testify to lawmakers on Tuesday and Wednesday on the Fed's view of the economy.
Job creation in the United States has slowed
dramatically in the last few months as employers worry about a sagging
global economy
hurt by Europe's snowballing debt crisis. Bernanke's peers at central
banks in China, the euro zone and Britain have eased monetary policy
this summer to prop up their economies.
The International Monetary Fund slashed its forecast for global
economic growth
on Monday and urged European policymakers to take bolder action to stem
their crisis. It also warned that China's economy risks a hard landing.
The U.S. factory sector also has shown signs of
contraction due to the global slowdown, although on Monday a survey
showed New York state manufacturers perked up in July. Still, new orders
shrank at the state's factories.
The retail data is
worrisome because it suggests consumer spending, which drives about
two-thirds of the economy, is also sagging.
"This is another
example of how broader economic uncertainty is having an impact on
economic activity," said Eric Fine, managing director of Van Eck G-175
strategies in New York.
JPMorgan economist
Michael Feroli called the retail report "ugly across the board,"
lowering the firm's forecast for second-quarter economic growth to 1.4
percent from 1.7 percent.
The economy grew at a 1.9 percent annual rate in the first quarter.
Separately, a poll
showed on Monday that American companies are scaling back plans to hire
workers with a rising share of firms saying the European debt crisis is
taking a bite out of their sales.
Forty-seven percent
of companies surveyed felt their sales have dropped due to Europe's
woes. Among companies that produce goods rather than provide services,
the impact was even greater.
In a separate
report, the Commerce Department said U.S. business inventories rose in
May as motor vehicle dealers restocked to meet demand.
Demand, however, looked weak in June. The retail sales report showed receipts at motor vehicle and parts dealers dropped 0.6 percent last month.
Sales at
electronics and appliance stores declined 0.8 percent, and were down 1.8
percent at gasoline stations, reflecting a decline in gasoline prices.
Often, relief at
the pump allows consumers to spend their money elsewhere. But that
didn't seem to be the case in June.
"The consumer is
obviously struggling, not benefiting much from weak gasoline prices,"
said David Sloan, an economist at 4Cast in New York.
And gasoline prices might not continue to decline. So far in July, prices for crude oil have risen.
Consumers also face
the prospect of higher taxes and less government spending next year, a
combination that could potentially push the economy into recession.
Lawmakers are
debating how to avoid this "fiscal cliff," which is built into current
law. Democrats warned on Monday they are prepared to let all Bush-era
tax cuts expire if Republicans insist on extending lower rates for top
earners.