WASHINGTON – Retail sales in August posted the weakest showing in two months as worried consumers tightened their spending habits.
The Commerce Department reported that the nation's retailers saw a tiny 0.2 percent increase last month following a much bigger 1.4 percent rise in July. It was the weakest performance since sales had actually fallen by 0.5 percent in June.
Much of the August weakness reflected a sharp slowdown in auto sales, which edged up just 0.4 percent last month after having surged by 4.3 percent in July.
The tiny 0.2 percent rise in retail sales was slightly better than analysts had been expecting. They were forecasting an outright decline in sales of 0.1 percent.
Consumer spending, which has been the driving force in this economic expansion, slowed dramatically in the spring as consumers were battered by soaring gasoline prices, rising interest rates and a cooling housing market, which made homeowners feel less prosperous and less inclined to spend money.
The overall economy grew at an annual rate of just 2.9 percent in the April-June quarter after turning in a sizzling pace of 5.3 percent in the first three months of the year.
While the sharp slowdown had raised concerns of a possible recession, economists have grown less concerned about that possibility because of a retreat in oil prices, which have declined significantly from their mid-July highs.