Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, February 14, 1991                   TAG: 9102140083
SECTION: BUSINESS                    PAGE: C4   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

RETAIL SALES FALL AGAIN\ DISMAL JANUARY REPORT QUICKENS FEARS OF LONG

The Commerce Department said retail sales totaled a seasonally adjusted $148.2 billion, down from $149.5 billion in December when sales dropped 1.5 percent - even worse than the 0.4 percent first reported last month.

It was the first back-to-back monthly decline in seven months.

At the same time, January sales were down 1.4 percent from those of January 1990, the first year-over-year decline in 29 1/2 years.

Some economists had said the recession would be short and mild, lasting just two quarters, but many now are having misgivings.

They point to the 6.2 percent unemployment rate in January that resulted in the loss of 232,000 jobs, worse than the 150,000 loss the previous month.

William K. MacReynolds, forecasting director for the U.S. Chamber of Commerce, said the economy was "tumbling faster as the year started than was realized at the time.

"The sharp downward revision in December retail sales, along with the decline in January, show that the consumer is not ready yet to lead the economy out of recession," MacReynolds said.

A recession usually is defined as two consecutive drops in the gross national product, the nation's total output of goods and services. The GNP dropped 2.1 percent in the final quarter of 1990.

Retail sales are a major concern of economists because they represent about half of overall consumer spending. Consumer spending, in turn, accounts for about two-thirds of the nation's economic activity.

Retail sales grew just 3.8 percent last year, the lowest gain since the last recession year of 1982 when they grew 3 percent.

John Silvia, an economist with Kemper Financial Services in Chicago, said spending remained weak because more than a million jobs have been lost since last summer, "so income growth is slowing."

While there is some concern over the Persian Gulf War, "what does affect spending [most] is fewer people out there making money," said Economist Gilbert Benz of the Swiss Bank Corp. in New York.

Many analysts believe a lengthy war would further fade consumer confidence and curtail spending even more.

A steep 4.4 percent decline in automobile purchases, the same drop as in December, paced the overall sales drop. Excluding the auto category, Commerce said, sales were unchanged from the previous month.

Sales of durable goods - products such as cars that are expected to last more than three years - sank 2.8 percent on top of a 3.4 percent plunge in December.

All major categories fell. Building materials were off 0.9 percent after plummeting 4.2 percent a month earlier. Furniture and other home furnishings sales slipped 0.4 percent after a 1.4 percent drop the previous month.

Non-durable goods inched up a barely perceptible 0.1 percent, failing to recover from a 0.4 percent drop in December.

Although department-store sales rose 0.8 percent, they failed to make up for the disappointing 1.1 percent decline during the December holiday shopping season. Apparel sales were flat after a 0.9 percent decline the previous month.

Grocery-store purchases increased 0.4 percent after a 0.2 percent gain, while restaurant and bar sales advanced 0.8 percent after December's 0.1 percent increase. Drug-store sales fell 1.2 percent on top of a 1.8 percent decline a month earlier.

Gasoline-station sales declined 2.3 percent on top of a 1.7 percent decrease in December, but analysts said the drop was due more from falling prices than lower volume.