Sales at department stores fell 0.8 percent in July. Economists had expected them to show a rise following reports from big retailers that they had a decent start to the back-to-school shopping season.
Sales at a broader category of general merchandise stores, which includes department stores and big retailers such as Wal-Mart, were flat in July following a 0.5 percent rise in June.
Many retailers had reported last week that back-to-school promotions had helped boost their sales in July. Target, Macy’s and luxury chain Saks all reported gains that beat Wall Street expectations. But retailers are worried that consumers may be thrifty when shopping this summer, sticking with basic necessities and holding out for sales. That’s a popular strategy in tighter economies, but one that hurts stores’ profits.
High unemployment and a spike in gas prices have forced many consumers to be more cautious about spending. Their hesitation was a major reason the economy grew a meager 0.8 percent in the first six months of the year, the weakest growth since the recession officially ended.
Many economists, including Federal Reserve Chairman Ben Bernanke, had thought the economic slowdown was mostly because of temporary factors, such as high gas prices and the parts shortage out of Japan.
But this week the Fed acknowledged that the economy’s problems are deeper. Its statement suggested growth could be dismal for at least two more years.
As a result, the Fed took the unprecedented step of pledging to keep a key interest rate it controls at a record low near zero at least through mid-2013.
Private economists have been busy marking down their own forecasts. Analysts at JPMorgan Chase said they expect the just 1.5 percent growth in the July-September quarter, a full percentage point lower than their previous forecast.
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