US retail sales dropped sharply last month, adding to fears that the economy there may be slipping into a full recession. According to figures from the Department of Commerce (DOC), retail sales were down by 2.4% month on month in September, much worse than had been expected.
The DOC altered the way it calculates seasonal adjustments in order to account for the effects of the 11 September attacks on Washington and New York. Even so, analysts had still been forecasting retail sales declines of around 0.8%.
The figures show that the attacks have had a substantial and direct effect on the US public’s desire to go shopping for goods and services. Given that consumer consumption accounts for around two-thirds of economic activity, this downturn could have profound knock-effects for the US economy. This, in turn, will ripple out through economies around the world, with the UK being particularly sensitive to US developments.
