- The Washington Times - Tuesday, April 15, 2008


Consumers — beset by a credit crunch, rising energy and food costs and a prolonged housing slump — boosted spending only slightly in March with the gain reflecting soaring gasoline costs rather than any real strength in demand.

The Commerce Department reported yesterday that retail sales edged up 0.2 percent in March after a 0.4 percent decline in February. However, without a 1.1 percent jump in sales at gasoline service stations, retail sales would have been flat last month.

Economists said the March report did nothing to dispel their worries that the country has either toppled into a recession or is very close to a downturn as households have been battered by a series of blows and now are facing rising layoffs.

“Don’t expect to see consumers return any time soon,” said Bernard Baumohl, managing director of the Economic Outlook Group. “They’re going to be hibernating for the balance of the year, nursing the wounds that stem from the worst job market in five years, the highest drop in home prices in more than half a century, record high gasoline prices and the worst credit crisis since the Great Depression.”

Last week, the University of Michigan’s consumer sentiment index for early April plunged to the lowest reading in 26 years, reflecting in part a third straight month of job losses in March and a rise in the unemployment rate to 5.1 percent.

Many analysts believe the sustained rise in layoffs is the strongest sign yet that the economy has slipped into its first recession since 2001. The Bush administration, which has yet to call the current slowdown a recession, insists a $168 billion economic stimulus plan will help jump-start the economy when checks begin arriving for 130 million households next month.

President Bush told members of his Cabinet yesterday that those stimulus checks will be “an important part of making sure this economy begins to recover in a way that will add confidence and hope.”

The day before today’s tax filing deadline, Mr. Bush also called on Congress to make his first-term tax cuts permanent as another way to boost the economy by eliminating “economic uncertainty” in the tax code.

But Senate Majority Leader Harry Reid said making Mr. Bush’s tax cuts permanent would help multimillionaires and special interests, not average working Americans.

Mr. Reid said stagnating incomes and rising health care, education, food and energy prices are squeezing middle-class families, who are looking for a change in U.S. economic policy, “not the same economic ideas that got us into this mess in the first place.”

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