Retail sales drop unexpectedly in April

Retail sales fell in April for a third 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 were saving more and spending less, delaying the start of a sustained recovery.

Retail sales fell 0.4% last month, a worse result than the flat performance many economists had expected, the Commerce Department reported Wednesday.

Retail sales had posted gains in January and, initially, February after falling for six straight months. The gains had raised hopes that the consumer sector of the economy might be stabilizing. But the setbacks in March and April -- and a revision Wednesday showing a decline in February -- cast doubt 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.”

The fall in retail sales in April came even though car sales posted a 0.2% increase. Excluding autos, the drop in retail sales would have been 0.5% -- much worse than the 0.2% gain economists had expected.

Sales other than autos showed widespread weakness last month. Demand at department stores and general merchandise stores fell 0.1%. Sales at specialty clothing stores dropped 0.5%.

Sales also fell in April at furniture stores, electronics and appliance stores, food and beverage stores and gasoline stations.