Retail Sales Dip in August Despite Gasoline Increases

Retail sales slumped 0.6% in August despite a huge jump in the amount of money Americans spent on gasoline, the government said today in its first report on consumer spending since the Persian Gulf crisis.

Some analysts had said in advance that the report would be skewed by sharply higher gasoline prices that would offset falling sales elsewhere. Indeed, sales in nearly all other categories declined.

Much of the increase in gasoline sales apparently represented increased prices rather than volume. The American Petroleum Institute said gas prices rose about 20% since Iraq overran Kuwait on Aug. 2.

The Commerce Department said overall sales totaled a seasonally adjusted $149.2 billion, down from $150 billion in July. The July sales, which rose 0.4%, turned out to be stronger than the 0.1% gain originally reported last month.

But a 1.1% advance in June had been the first increase since last January and analysts worried whether developments in the Middle East would jack up prices and erode consumer confidence, driving sales back down.

Indeed, two major consumer confidence surveys plummeted after Iraq invaded Kuwait.

Since consumer spending represents two-thirds of the nation’s economic activity, there was concern that a drop-off could help push the nation into a recession. Retail sales account for about half of overall consumer spending.

The Commerce Department report said gasoline station sales jumped 6.4% in August, the largest increase since an 8.3% advance in August, 1979.

Excluding the gasoline category, retail sales tumbled even farther, down 1.1%.

Auto sales fell 4.3%, their largest drop since a 5.6% decrease last January. Excluding the automobile category, sales would have risen 0.4%.