Newspaper article THE JOURNAL RECORD

Retail Sales Trends Worry Economy Watchers

Newspaper article THE JOURNAL RECORD

Retail Sales Trends Worry Economy Watchers

Article excerpt

Optimists on the economic and investment outlook have grown increasingly worried of late that the American consumer might let them down.

The prime source of their concern is the government's monthly statistics on retail sales, which have posted declines in each of the last three months. They fell 0.4 percent in March, 0.9 percent in April and 0.7 percent in May.

As economists have been quick to point out, the last three-month run of lower sales reports came in the 1981-82 recession.

Many observers want to see more data before they hit the alarm button. The latest numbers, they say, may have been skewed by quirky weather patterns or some other aberration.

Nevertheless, almost all agree that the figures have sketched out a picture of potential trouble that is hard to ignore.

If anybody packs the wallop necessary to knock the long economic expansion off track, they say, it is U.S. consumers, who account for two-thirds of the country's gross national product.

``The role of the consumer in the U.S. economy is akin to that of Atlas in Greek mythology,'' says James Grant in the current issue of his commentary Grant's Interest Rate Observer.

``The consumer is the indispensable man, woman and child. Let him stop borrowing (and therefore stop spending) and the GNP would be in jeopardy.''

Or in the words of David Resler, chief economist at Nomura Securities Inc. in New York: ``This downturn in consumer spending is crucial. Modest growth in consumer spending is essential to keep the economy from slipping into recession.

``American consumers' demands for goods and services have been a main prop to global production and provide much of the motive for business investment in plant and equipment.

``If consumers sustain this recent spending pace much longer, other countries' economies will also be slow and curtail their demand for U. …

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