This past Christmas, retailers were hoping that Americans would ignore the recession and open their wallets to the temptation of slashed prices. But, according to the latest wave of dismal economic news, that hope of high sales proved to be in vain.
In December, retail sales were down 4 percent from the same time the year before, except for gasoline. That's on top of November's poor sales, which were down 2 percent from the previous year.
Some retailers, especially department and specialty apparel stores, were hit particularly hard. Abercrombie and Fitch saw December sales tumble 24 percent from the year before. At Zales jewelry stores, sales fell 22 percent. Sales in Neiman Marcus and Bergdorf Goodman stores declined 31.2 percent.
Even global giant Wal-Mart was not immune. The world's biggest retailer said that while sales increased at its U.S. branches—rising 1.7 percent from last year, excluding gasoline sales—the rise was lower than the forecast of a 2.8 percent increase.
The immediate result of all the bad news was a slide in stock prices. Wal-Mart's stock fell 8.6 percent, while the Dow fell 0.9 percent.
Another effect of the slow sales, however, is continually dropping prices. Wal-Mart announced yesterday that it's cutting the costs of even more items, particularly those that might fit with New Year's resolutions, like fitness machines and low-fat foods.
Adding to economic jitters, a new jobless claims report was released by the Labor Department. It showed that the total number of people on unemployment rose to 4.6 million in the week that ended December 27. Initial claims for the week that ended January 3, numbered at a seasonally adjusted 467,000, mark the lowest number in nearly three months. While that's the good news, the bad news is that, overall, more people are on unemployment than at any time since 1982. And reports tomorrow are expected to show that December was the 12th straight month that the United States has shed jobs.
In the wake of the latest grim economic numbers, President-elect Barack Obama is delivering a speech this morning on the importance of the $800 billion stimulus plan.
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