Retail Sales Sink in June

The long-awaited slowdown in consumer spending appears to have hit the economy in June.

Retail sales plunged 1.1% last month, the biggest decline in more than a year, according to a government report.

The decline was bigger than expected and driven by slumping auto sales during a month when the nation's biggest automakers reined in generous buyer incentive programs.

Economists had expected sales to decline 0.7%. May's 1.2% gain was revised higher to 1.4%.

Excluding autos, retail sales fell 0.2%, vs. a consensus forecast calling for a 0.2% gain. Auto sales dropped 4.3%.

The retail sales reportis the latest data to trigger concerns that the U.S. economic recovery is slowing down. Nonfarm payrolls increased much less than expected in June, and durable goods orders have fallen for the past two consecutive months.

There's growing speculation about the waning impact of the massive tax cuts signed into law last year. Economists also worry that high gasoline prices -- which have touched $2 a gallon this spring and summer -- are eating into the discretionary spending of consumers. Nevertheless, consumer confidence is at a two-year high, according to the Conference Board business group.

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