WASHINGTON — Retail sales fell in April for a second straight month, dashing hopes that consumer spending was starting to revive and would help end the recession.
Economists said families who are worried about layoffs and unpaid job furloughs are saving more and spending less, delaying the start of a sustained recovery.
Retail sales fell 0.4 percent last month, worse than the flat performance many economists had expected, the Commerce Department reported Wednesday.
Retail sales had posted gains in January and February after falling for six months. The gains had raised hopes that the crucial consumer sector of the economy might be stabilizing.
But the setbacks in March and April retail sales cast doubts on that prospect.
“People are obviously still very nervous and not spending,” said David Wyss, chief economist at Standard & Poor’s in New York. “The economy is still in a recession, and I don’t think we will hit bottom until late summer or early fall.”
Analysts said the economy should benefit in coming months from the tax relief included in the $787 billion stimulus plan Congress passed in February. But the extra $17 a week that the average family will receive won’t translate into a major boost in spending.
Such modest relief is hardly enough to negate the effects of layoffs and employee furloughs and consumers struggling to boost savings because of fears about the future.
The savings rate, which was hovering around zero a year ago, has climbed to just above 4 percent. Many economists think it will hit 6 percent or more this year as workers anxious about layoffs and depleted investments put away their credit cards. Unemployment rose to a 25-year high of 8.9 percent in April.
The fall in retail sales in April came even though car sales posted a 0.2 percent increase. Excluding autos, the drop in retail sales would have been 0.5 percent — much worse than the 0.2 percent gain economists had expected.
Commerce also said business inventories fell 1 percent in March, a seventh straight drop.
