Sales at U.S. retailers probably dropped in July for the first time in five months as record gasoline prices siphoned the cash from tax rebates out of consumers' pockets, economists said before reports this week.
Purchases fell 0.1 percent after a 0.1 percent gain in June, according to the median estimate in a Bloomberg News survey before the Commerce Department's report on Wednesday. Other reports may show food and fuel prices pushed up the cost of living, while manufacturing stagnated.
Consumer spending, which accounts for more than two-thirds of the economy, is likely to keep fading after growing at the slowest pace in 17 years. Americans will still be faced with rising unemployment, falling property values and elevated fuel costs after the rebate checks have gone out.
“The consumer is being squeezed on a lot of fronts,” said John Ryding, chief economist at RDQ Economics LLC in New York. “I don't see at this point the catalyst to a near-term recovery.”
Retail sales excluding automobiles increased 0.5 percent following a 0.8 percent gain in June, according to the survey median. Spending at service stations, reflecting the cost of fuel, probably boosted the figure, economists said.
Regular unleaded gasoline averaged $4.06 a gallon in July, a monthly record, according to AAA..
Spending may rise at a 0.2percent annual rate in the fourth quarter, the smallest gain since 1991, after an estimated 1.5 percent gain in the July-to-September period, according to economists surveyed by Bloomberg in the first week of July.
Advance estimates on gross domestic product released July 31 also put that gain in spending at 1.5 percent for the second quarter.