THE VIRGINIAN-PILOT 
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Saturday, January 14, 1995             TAG: 9501140156
SECTION: BUSINESS                 PAGE: D1   EDITION: FINAL 
SOURCE: ASSOCIATED PRESS 
DATELINE: WASHINGTON                         LENGTH: Medium:   57 lines

CHRISTMAS DIDN'T CHEER UP RETAILERS CONSUMER SALES DECLINED AT HEIGHT OF SHOPPING SEASON

The first decline in retail sales in eight months - at the height of the Christmas shopping season - suggests to stunned analysts that Americans' spending spree may finally be slowing.

Despite the tail-off, sales grew more rapidly for all of 1994 than they had in a decade.

The Commerce Department said Friday that sales dropped 0.1 percent in December, the first decline since a 1 percent plunge in April.

Analysts said that a long-awaited slowdown in consumer spending may be under way as interest-rate increases begin to take a toll. Still, they predicted that an ever-wary Federal Reserve will boost rates at the end of the month for a seventh time in less than a year.

``The economy may be a lot less robust than prior data had suggested. This is a very shocking development,'' said economist Elliott Platt of Donaldson, Lufkin & Jenrette Securities Corp. in New York City.

``The weakness in this report should open up the debate as to whether the Fed has to raise rates'' at its Jan. 31-Feb. 1 meeting, said his colleague, Marilyn Schaja. ``We think that the odds are still in favor of a Fed tightening, but the odds have clearly been lowered.''

The Commerce Department also said that November sales were sharply lower than previously thought. They advanced just 0.2 percent in November, instead of an earlier estimate of 1.2 percent.

Still, sales for all of last year were up 7.6 percent, the strongest showing since they rose 10 percent in 1984.

Kevin SigRist of Norwest Corp., a Minneapolis bank, said discounts may account for some of the December drop-off. ``Consumers may be buying as much but paying less,'' he said.

He also said the decline will not necessarily lower fourth-quarter economic growth figures due out Jan. 27 because higher inventories could take up the slack. Analysts project that the economy was on target to grow more than 4 percent last year.

Friday's data triggered a rally on Wall Street. The Dow Jones industrial average rose 49.46 points by closing, and bond prices were up sharply.

The Commerce Department said sales totaled a seasonally adjusted $191.9 billion in December, down from $192.1 billion the previous month. Retail sales in December normally account for about one-tenth of the year's total. The December decline means the final month's sales were slightly less than in 1994.

Sales of durable goods - appliances, autos and other goods expected to last more than three years - slipped 0.1 percent in December following a 0.2 percent advance.

KEYWORDS: CHRISTMAS SHOPPING RETAIL SALES ECONOMY by CNB