- The Washington Times - Saturday, November 15, 2008

ANALYSIS/OPINION:

America is panicking over continual news of the economic crisis, global or American, and that fear has resulted in fewer trips to the mall, fewer new- and used-car sales, and consumers holding tight to every dollar. Retail sales dropped last month by almost 3 percent - the highest one-month drop since 1974. The drop followed four months of plunging sales, and there is an expectation that it will not pick up as “Black Friday” and the Christmas holidays approach. The retail sales figure does not include the auto industry, whose sales dropped 5 1/2 percent.

Overall sales declined 4 percent this year. Retail sales declines are a symptom of a much larger problem on the horizon. The Gross Domestic Product dropped by three-tenths of 1 percent, or $363.7 billion, last quarter.

The news wasn’t all bad. A large contributor to the drop was due to declining gasoline prices, which could present a silver lining in the future. As oil prices drop, retail businesses that rely heavily on the trucking industry to transport merchandise will find their overhead declining in the months ahead and that may keep some of them from seeing more red.

What retailers, particularly small businesses, need now is an economic stimulus package that cuts their taxes and gives them more deductions for their overhead costs (perhaps even a fuel-cost deduction). They need immediate relief heading into the tax season.

Consumers will not begin spending until they are confident that the economy is no longer in crisis mode. In the meantime, businesses large and small need to see the one thing their bottom line needs to survive - and that’s consumer spending.

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