Retailers’ 1990 Gain of 3.8% Is Worst Since ’82

Cautious spending by worried consumers produced a skimpy 3.8% gain in U.S. retail sales last year, the smallest annual increase since the nation last was mired in recession in 1982, the government reported Tuesday.

The year was capped by dismal results in December: Seasonally adjusted sales fell 0.4% in December from November’s total, the second monthly decline in a row. The November decline was 0.1%.

Economists said the Commerce Department figures reflected a recessionary economy and stemmed mainly from consumers’ concerns in recent months about the prospect of war in the Persian Gulf and rising unemployment.

“When people get uncertain, they typically postpone purchases, which is what we saw,” said Edward E. Yardeni, chief economist for Prudential-Bache Securities.

Taking inflation into account, auto dealers, department stores and other U.S. retailers apparently lost ground for the first time in eight years, said Sandra Shaber, an economist with the Futures Group in Washington.

She estimated that U.S. sales, minus the impact of retail price increases, fell 0.2% to 0.5% in 1990. According to Shaber’s figures, the last time sales adjusted for inflation declined was in 1982, when “real” sales fell 0.9% and sales unadjusted for inflation rose 3.0%.

She called the December figures an indication of “an extremely bad Christmas season” and “an ongoing recession.” Already this month, a number of retailers hurt by the weak holiday shopping season have closed stores, fired workers and, in some cases, sought bankruptcy court protection from creditors. And more cutbacks are expected.

Still, analysts suggested that December’s figures somewhat understated retailers’ performances during the month and are likely to be revised upward.

The preliminary numbers, based on economic activity in the first 20 days of the month, missed the gain in auto sales and the apparent pickup in business at big department stores and other chains in the days just before and after Christmas, said Carl Steidtmann, chief economist for the retail consulting firm Management Horizons.

Also, analysts noted, declining service station sales--more a reflection of lower gasoline prices than of weakening business conditions--figured in the December sales figures.

Rising unemployment, heavy corporate debt and deepening problems at major banks and other financial institutions have raised concerns among a sprinkling of economists that the nation is sinking into a severe recession that could last all year or more. But other analysts, after evaluating the latest sales figures, remained hopeful that a recovery will come within a matter of months.

They pointed to falling gasoline prices, moves by the Federal Reserve to reduce interest rates and the likely “pent-up demand” among Americans for consumer goods. Most important, analysts said, a quick victory in a Persian Gulf war could spur a surge in spending by renewing consumer confidence in the economy.

“It all depends on the consumer, and the consumer is extremely focused on the Mideast,” Yardeni said.

During December, only food stores, furniture and home furnishings retailers and drugstores showed sales gains. Drugstores fared the best, with a 1.9% increase.

The biggest declines were at service stations, which were off 3.1%, and at home improvement stores, down 2.7%.

According to the Commerce Department, last year’s retail sales totaled $1.8 trillion. Adjusted for seasonal trends, December sales totaled $151.1 billion.

Retail Sales Seasonally adjusted, billions of dollars Dec., ‘90: $151.1 Nov., ‘90: $151.6 Dec., ‘89: $145.8 Source: Commerce Department