December Retail Sales Reflect Slowdown

The holiday shopping season ended on a sour note in December as retail sales rose an anemic 0.3 percent. Consumer confidence, meanwhile, has sunk to a two-year low.

Many analysts said reports released Tuesday underscored how pronounced the economic slowdown has become and raised chances the Federal Reserve will cut short-term interest rates today.

“These numbers don’t indicate the economy is sliding into recession, but they do indicate that monetary policy probably should be relaxed from its current restrictive stance,” said economist Lynn Reaser of First Interstate Bancorp in Los Angeles.

Tuesday’s Commerce Department report showed a lackluster shopping season in which consumers spent a seasonally adjusted $198.6 billion, up just 0.3 percent from November.

For the year, sales rose 4.9 percent above 1994, to $2.3 trillion. It was the smallest advance since sales edged up 0.6 percent in 1991 as the last recession was ending.

In another sign of economic sluggishness, the Conference Board said Tuesday its index measuring consumer confidence plunged 12 points in January to 87, lowest since an 86.7 reading in March 1994.