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US Retail Sales Fall 0.4 Percent In March

By CHRISTOPHER S. RUGABER

WASHINGTON (AP) â¿¿ Sales at U.S. retailers fell in March from February, indicating that higher taxes and weak hiring likely made some consumers more cautious about spending.

Retail sales declined a seasonally adjusted 0.4 percent last month, the Commerce Department said Friday. That followed a 1 percent gain in February and a 0.1 percent decline in January. Both February and January figures were revised lower.

Consumers cut back across a wide range of categories last month. Sales at auto dealers dropped 0.6 percent. Gas station sales dropped 2.2 percent, partly reflecting lower prices. The retail figures aren't adjusted for price changes.

Excluding the volatile categories of autos, gas and building materials, core sales dropped 0.2 percent in March. That followed a gain of 0.3 percent in February. Department stores, electronics retailers and sporting goods outlets all reported lower sales.

The retail sales report is the government's first look at consumer spending, which drives about 70 percent of economic activity.

The decline in March shows higher Social Security taxes are starting to affect consumers and could dampen growth in the spring.

Many economists still predict economic growth accelerated to an annual rate of roughly 3 percent in the January-March quarter. That would be a significant increase from the anemic growth rate of 0.4 percent reported for the October-December quarter.

Still, economists say the improvement is likely temporary. Many now expect weaker spending will be among factors that slow growth again in the April-June quarter, to an annual rate of around 1.5 percent.

"The U.S. consumer looks a little less resilient," said Michael Feroli, an economist at JPMorgan Chase. "It now appears that close to $200 billion in higher taxes may have actually had some impact on consumer spending."

A separate report Friday on April consumer confidence seemed to bolster that point.

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