- The Washington Times - Thursday, August 14, 2008

Retail sales delivered the weakest performance in five months in July as shoppers shunned autos while they paid more for gas.

With the mass mailings of $92 billion in rebate checks now just a memory, there is concern that the fragile economy could slow even more in the second half of this year.

The Commerce Department reported Wednesday that retail sales fell 0.1 percent last month, the first decline since a 0.5 percent tumble in February. It was a worse showing than the flat reading that economists had been expecting and followed a revised-but-still-weak 0.3 percent reading for June.

Analysts said retail sales would have been more feeble without the $92 billion in rebate payments that the government sent out in May, June and July. Those checks helped to counter plunging home prices, rising unemployment and soaring gasoline prices.

The bulk mailings are now over, though, leaving economists worried about what will happen next to spending.

“Cautious and uncertain consumers are watching their wallets and with the back-to-school shopping season under way, that does not bode well for retailers,” said Naroff Economic Advisors.

Department store operator Wall Street expectations.

The overall economy grew at an annual rate of 1.9 percent in the April-June quarter, helped in part by the stimulus payments. Mr. Wyss said he was looking for growth of about 2 percent in the gross domestic product (GDP) in the current July-September quarter. But he forecast that the GDP would shrink in the final three months of this year and the first three months of next year, as the impact of the rebate checks wears off.

Two consecutive quarters of falling GDP is the classic definition of a recession. Other economists said they also were looking for negative GDP then.

Lexington, Mass., forecasting company, said he thinks GDP would shrink at an annual rate of 0.7 percent in the fourth quarter of this year and drop by 0.4 percent in the first quarter of next year. He said he was looking for these declines even with the help the economy will get if energy prices keep falling.

Auto sales fell by 2.4 percent in July - another dismal month for automakers who saw sales activity plunge to the lowest level in 16 years as the weak economy and rising job layoffs severely dampened demand.



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