US Retail Economy Takes A Turn For The Worse

19 June 2012 05:00am - Phoebe Robinson

US Retail Economy Takes A Turn For The Worse

Data has shown there has been a slow down in the US economic recovery. For the second month in a row US retail sales have shown that the growth of the economy is not looking promising.  Retail sales fell by 0.2% as demand for building materials took a turn for the worse and declined gas prices weighed on receipts in petrol stations during May according to the US Commerce Department as limited job and income gains held back consumers.

The decrease in sales matched April’s drop that was previously reported as a gain. Sales excluding car dealerships saw a drop of 0.4% the sharpest and the first back to back decline for two years.  

Consumer spending is a key pillar for the recovery of the economy and accounts for 70% of the US economy, thus the fact that we are seeing the smallest wage gains in a year and unemployment is exceeding 8% in the US is leaving their economy more vulnerable to the jolts from the Eurozone crisis.

"The question that remains unanswered is whether this weakness is merely a temporary payback from unexpected strength in sales earlier in the year or if the slowing trend will continue," said Jim Baird, chief investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan.

Last month GPD figures showed that the US economy grew at an annualised pace in the first three months of 2012 of 1.9%, this was down from an initial estimate of 2.2%.