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Friday, Aug. 14, 1998
GM strike pulls July sales figures down
Despite decline, Americans still `spending money like crazy,' analysts say
By DAVE SKIDMORE
Associated PressWASHINGTON - General Motors car and truck sales plummeted last month because of strikes, but otherwise Americans turned out in force at shopping malls, furniture stores and clothing shops.
Jobs are plentiful and they're not letting Asia's troubles dampen their free-spending ways, economists said.
Retail sales overall suffered the worst drop in 15 months, falling 0.4 percent in July to a seasonally adjusted $225 billion, the Commerce Department said Thursday.
The decline came almost entirely in autos, down 3 percent to $59 billion, also the steepest decrease since April 1997.
The GM strikes ended late in July, after idling more than 190,000 workers for nearly two months. But the settlement wasn't in time to prevent a 39 percent sales slump for the company, compared with the previous July. For the first time in 28 years, Ford sold more cars than GM during a month.
Outside of autos, retail sales rose a healthy 0.5 percent.
Americans are ``spending money like crazy,'' said economist Joel Naroff of First Union Bank Corp. in Philadelphia. ``The consumer is continuing to carry the load for the economy.''
Their purchasing is helping offset a drop in exports to Asia. Consumer spending on goods and services represents roughly two-thirds of economic activity and spending on retail goods about half of that.
Economist Lynn Reaser of NationsBank Corp. in Jacksonville, Fla., cited three factors for the healthy sales pace: plentiful jobs, low mortgage rates and record stock market levels.
The number of Americans filing first-time applications for unemployment benefits slipped by 7,000 last week to a seasonally adjusted 301,000, the Labor Department said. That was down from 394,000 for two consecutive weeks in late June and early July, when tens of thousands of strikers filed claims.
A four-week moving average of claims, which smoothes weekly volatility, hit a four-month low of 306,500.
``The job market remains very healthy,'' Reaser said. ``Although companies have expressed concern about their profits, they have not engaged in large and widespread layoffs.''
Meanwhile, Freddie Mac, the mortgage company, said fixed-rate, 30-year mortgages averaged 6.91 percent this week, down from 6.94 percent. They haven't been more than a shade lower than that since 1993 and they're fueling strong home sales.
As a result, furniture stores reported a 1.2 percent increase in sales last month and building-supply and hardware stores, 1.1 percent.
Sales also rose at clothing and accessory shops, drug stores, gas stations, food stores and department stores. However, they fell at restaurants and bars.
Investors fear Asia's slump will hurt profits, not only by reducing exports but also by sending a flood of cheaply priced imports to compete against goods made domestically.
Import prices - other than petroleum - fell 0.5 percent in July and were down 3.9 percent from a year ago, the Labor Department said.
``A recession in Asia increased deflationary pressures,'' said economist Gerald D. Cohen of Merrill Lynch. ``Falling import prices portend further deflationary trends in the U.S.''Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web