Sharp decline in US retail sales

Shoppers leave a Costco store in Chicago (Oct. 8)

The economic downturn is hitting consumers hard

US retail sales fell by more than expected in December, official figures have shown, as shoppers cut back on spending over the Christmas period.

Sales fell by 2.7% last month, the Commerce Department said. This followed November's revised fall of 2.1% which was first estimated at a 1.8% decline.

It is the sixth month is a row that sales have fallen as the economic downturn takes its toll on consumers.

For the whole of 2008, retail sales were down 0.1%, the department said.

Gloomy picture

The government figures showed that nearly all areas of retail sales fell.

Car sales dropped 0.7% and are now 22.4% below the level seen a year ago.

Excluding car sales, December's retail sales were down a record 3.1%.

"Bad, ugly and worse," said Marc Pado, market strategist at Cantor Fitzgerald.

"The problem here is that these are month-over-month numbers and there were big downward revisions to November.

"As bad as they are, they are worse than they appear because November was worse than reported."

After the December figures had been released, luxury-jewellery retailer Tiffany said its same-store sales for the holiday season fell by 24% and warned that fourth-quarter earnings would be hit.

Stimulus package

Last week, a string of major US retailers reported disappointing sales figures and cut their profits forecasts.

Even sales at discount giant Wal-Mart fell short of expectations, and the firm said fourth quarter earnings figures were set to miss earlier estimates.

President-elect Barack Obama wants to push through an $800bn (�550bn) economic stimulus package through Congress in the next few weeks.