December 25, 2008

U.S. retails sales plunge for holiday

Steep discounts stirred up last-minute shopping but this Christmas season shapes up as one of the worst on record, U.S. retail analysts said Thursday.

Total retail sales for November, excluding automobile sales, were down 5.5 percent from November 2007 and down 8 percent year-to-year for December, through Christmas Eve, MasterCard Inc. said. The credit form's SpendingPulse Unit released the figures Thursday, The Wall Street Journal reported.

The numbers were significantly affected by a 40 percent decline in gasoline prices. When those prices are excluded the retail sales declines appear somewhat more moderate -- 2.5 percent in November and 4 percent in December.

The numbers are much worse than analysts had projected, the Journal said.

This will go down as the one of the worst holiday sales seasons on record, Mary Delk of the consulting firm Deloitte LLP said. Retailers went from 'Ho-ho' to 'Uh-oh' to 'Oh-no.'

Luxury goods, which historically have not been much affected by economic downturns, took the biggest losses this season with sales off 21.2 percent. When jewelry sales are included, sales of luxury items were down 34.5 percent, the report said.

Michael McNamara, vice president of research and analysis for MasterCard Advisors, told the Journal there has been a major contraction in consumer spending.

The report comes during the same week that the U.S. Commerce Department reported consumer spending, adjusted for inflation, rose slightly in November, along with the personal savings rate.