U.S. economy looking weaker on retail sales slump

The outlook for the U.S. economy appeared a little dimmer today after a report was released saying Americans spent less at retail businesses for a third straight month in June. The Commerce Department report led some economists to downgrade their estimates for economic growth in the April-June quarter. Many now think the economy grew even less than in the first quarter of the year, when it expanded at a sluggish 1.9% annual rate. Spending in June fell in nearly every major category—from autos, furniture and appliances to building, garden supplies and department stores. Overall, retail sales slid 0.5% from May to June, the Commerce Department says. Retail sales hadn’t fallen for three straight months since the fall of 2008, at the height of the financial crisis. The weak U.S. spending figures were announced on the same day that the International Monetary Fund slightly lowered its outlook for global growth over the next two years. “However hard you look, there’s just no good news in this report at all,” says Paul Ashworth, chief U.S. economist at Capital Economics. Retail sales were still 4.7% higher in the April-June period than in the second quarter of 2011. And retail sales don’t include spending on services, which represents a larger portion of the economy. Still, Ashworth said overall economic growth likely slowed to an annual rate of just 1.5% in the second quarter. That’s isn’t enough to lower the high unemployment rate, which remains at 8.2%. The Associated Press has the full story here.