Retail Sales Post Modest August Gain

Although American consumers continued to fill new homes with furniture and bought plenty of back-to-school clothes in August, analysts see signs of a slowdown in the shopping spree that has helped insulate U.S. companies from economic crises abroad.

Retail sales increased a mild 0.2% to a seasonally adjusted $224.8 billion in August, the government said Tuesday.

That was below the 0.5% gain expected by many analysts, and it raised fears that the stock market’s plunge and turmoil in overseas economies are weighing on U.S. consumer confidence.

“There’s no sign of a collapse here, but there is slowing, and factors abroad could brake spending even more,” said Paul Kasriel, domestic economist for Northern Trust Co. in Chicago.

Third-quarter consumer spending will probably cool to a 2% annual growth rate, down from a 5.9% pace in the second quarter, said Christopher Low, chief economist at First Tennessee Capital Markets in New York.

Although’s August’s sales gain looked at first glance like a big improvement from a 0.6% drop in July--which was an even larger plunge than first reported--strikes at General Motors Corp. knocked car sales way out of kilter this summer, and outside the automobile category, sales of other retail goods have slowed.

In August, retail sales excluding autos grew by a relatively modest 0.3%, compared with a 0.6% jump in July that was nearer the average for this year.

Heavy spending by American consumers has been the most important factor keeping production by U.S. companies on the upswing in spite of weaker demand abroad. A spreading global financial crisis, which started in Asia, is drying up markets for American products overseas.

Analysts say Americans with one eye on the rest of the world’s troubles are also starting to shop more cautiously--even though unemployment remains near a 28-year low and most people’s incomes continue to rise.

In August, sales of durable goods, or items expected to last three years or more, were unchanged after July’s 2.1% slide caused mainly by the GM strikes’ effects on car sales.

Before July, durable goods sales had grown in every month this year except March.

Restraining the overall August retail sales figure was a 0.2% dip in car sales, which surprised some analysts who thought car purchases would roar back after the settlement of the GM strikes.

The strikes during July and August depleted the supply of available vehicles on dealers’ lots and sent car sales plummeting by 4.1% in July.

But analysts noted that the August dollar sales figure for autos was also depressed by price cuts and rebates at many dealers.

“Generally, people are turning a bit more cautious for obvious reasons because of the recent financial developments,” said Wayne Ayers, chief economist at BankBoston. He added that car sales might also be slowing because, nearly eight years into the current economic expansion, much of the demand has already been satisfied.

Meanwhile, furniture stores reported a strong 1% sales increase in August, after similar growth in the previous three months. Low mortgage rates have encouraged many Americans to buy houses this year, which they’ve rushed to fill with new items.

However, sales at hardware and building supply stores dropped 0.5% in August.

Sales of nondurable goods were up a cooler 0.3% in August after a 0.6% increase in July.

Clothing and accessory shops led the growth, with sales up 1.2% as back-to-school shopping got underway. Department store sales also rose 0.3%.