American Shoppers get Drastic With the Plastic

16 July 2004

US citizens are keeping tight hold of their wallets and staying away from retail therapy, according to latest retail sales figures.

But the Federal Reserve still insists the nation's economy is in good shape and heading for its first interest rate rise in four years. This is expected despite the 1.1 per cent fall in retail sales recorded in June -- the largest plunge in sixteen months.

Cars stayed on the lots, with sales dropping 4.3% as US drivers took fright at the recent hike in gasoline prices. Food, drink and clothes also remained sluggish as fewer new workers were taken on by US employers --112,000 rather than the 250,000 predicted by economists.

Opined Patrick Edwards, an analyst at AG Edwards & Sons: "We still feel fairly confident in the health of the consumer sector because payroll growth is still up compared with a year earlier."

So no need yet to reach for the Prozac. Year on year sales figures are still up by 6.3% and, according to the Department of Commerce, sales of furniture, electronics, health and beauty products, sporting goods books and music increased in June.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff