Window shopping not enough

WASHINGTON – A second straight month of declining retail spending will likely keep unemployment high and help weaken the recovery.

Not everyone is suffering, though. Shoppers with stable jobs and steady pay can find lots of bargains. The economy is bleaker for anyone seeking a job or at risk of losing one. Still, Americans as a group are spending less, and that threatens the pace of the recovery.

Federal Reserve officials took note of the weakness when they met in June, the minutes of that meeting show. The Fed signaled that it stood ready to take new steps to sustain the recovery if the economy worsened.

In the meantime, Americans will likely be spending only warily.

“Clearly, the consumer is being more cautious now,” said David Wyss, chief economist at Standard & Poor’s in New York.

Consumer spending accounts for 70 percent of economic activity. It grew at a solid rate during the first three months of the year. But consumers have since held back in the past two months. Many are worried about high unemployment, a volatile stock market and a housing industry that has struggled without government incentives.

Those economic conditions prompted Federal Reserve officials to cut their forecasts for growth this year slightly, according to minutes from the Fed’s June 22-23 meeting that were made public Wednesday. Fed policymakers revised their growth forecasts to between 3 percent and 3.5 percent this year. That’s down from a forecast of 3.2 percent to 3.7 percent made in April.

With risks growing, Fed policymakers saw the need to explore new options for bolstering the economy. That’s a turnaround from earlier this year when they were moving to wind down crisis-era supports. No new specific steps were disclosed or agreed upon.

In June, retail sales revenue fell 0.5 percent, the Commerce Department said. That followed a 1.1 percent fall in May.

Pulling down the overall June figures were a drop in auto sales and declining gas prices. Excluding those volatile categories, sales ticked upward slightly for the month.

Consumers who have the extra cash are able to take advantage of discounts. Wyss said consumers with jobs were responding to bargains. It just doesn’t show up in retail sales statistics, which are not adjusted for price changes. For example, if a store discounts a shirt by 20 percent, it must sell more shirts to make up for the difference in prices.

June is typically a time when stores clear out their merchandise to make room for fall products. But merchants were forced to offer deeper discounts to draw wary shoppers, according to BMO Capital Markets’ John D. Morris, who monitors the volume and level of discounts at mall-based stores.

But some shoppers are forced to pass on the sales because they are worried about their finances.

“The deals are great, but I’m not actually buying because I can’t afford it,” said Angel Mendoza, 57, who was in midtown Manhattan on Wednesday. The former porter for a Wall Street firm said he has been collecting unemployment benefits since he injured himself in November. He has since moved in with his sister in Bayonne, N.J.