THE ECONOMY

Retail sales delivered the weakest performance in five months in July as shoppers shunned autos while they paid more for gas.

With the mass mailings of $92 billion in rebate checks now just a memory, there is concern the fragile economy could slow even more in the second half of this year.

The Commerce Department reported Wednesday that retail sales fell 0.1 percent last month, the first decline since a 0.5 percent tumble in February. It was a worse showing than the flat reading economists had been expecting and followed a revised but still weak 0.3 percent reading for June.

Analysts said retail sales would have been more feeble without the $92 billion in rebate payments the government sent out in May, June and July. Those checks helped to counter plunging home prices, rising unemployment and soaring gasoline prices.

BUYING FEWER CARS: Auto sales fell by 2.4 percent in July – another dismal month for automakers who saw sales activity plunge to the lowest level in 16 years as the weak economy and rising job layoffs severely dampened demand.

Excluding the big drop in autos, retail sales would have posted a 0.4 percent increase. While that was a positive reading, it was still the weakest showing for sales excluding autos in five months.

DRIVING FEWER MILES: Much of what little strength there was in July came from a 0.8 percent jump in sales at gasoline stations because of surging prices rather than increased demand.

The Federal Highway Administration said Wednesday that Americans drove 12.2 billion fewer miles in June than the same month a year earlier.

MORE CASH BACK? Given the poor start to the third quarter, Democrats in Congress have begun to push for a second stimulus package to keep the economy afloat in coming months. So far, the Bush administration has opposed it in part over concerns about what further stimulus activity will do to the budget deficit. The administration is already projecting the budget gap will hit a record of $482 billion next year.

Associated Press