By Bob Willis
Aug. 13 (Bloomberg) -- Sales at U.S. retailers probably dropped in July for the first time in five months as record gasoline prices siphoned the tax rebates out of consumers' pockets, economists said before reports today.
Purchases fell 0.1 percent after a 0.1 percent gain the prior month, according to the median of 75 estimates in a Bloomberg survey. Another report may show the cost of imported goods jumped again last month.
Consumer spending, which accounts for more than two-thirds of the economy, is likely to keep fading after growing at the slowest pace in 17 years. Americans will still be faced with rising unemployment, falling property values and elevated fuel costs after the rebates have been spent.
``Once the rebate checks go away, there is not a lot of underlying support for the consumer,'' said Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina.
The Commerce Department's report is due at 8:30 a.m. in Washington. Estimates ranged from a drop of 1 percent to a gain of 0.6 percent.
Retail sales excluding automobiles climbed 0.5 percent, according to the survey median. Higher gasoline prices probably increased spending at service stations and boosted the sales figure, economists said.
The Labor Department may report at the same time that import prices in July rose 1 percent, according to the survey median. That would compare with a 2.6 percent rise the prior month, when the cost of imported petroleum surged 8 percent.
Gasoline Prices
Regular unleaded gasoline reached a record monthly average of $4.06 a gallon in July, a cent higher than in June, according to AAA. Prices have since declined. Food prices also rose, sending shoppers to discount stores in search of bargains.
Wal-Mart Stores Inc. last week said same-store sales will probably slow this month after rising 3 percent in July because most shoppers have already received their tax rebates. More than 90 percent of the estimated $100 billion in rebate checks forecast to go out this year had been sent as of mid-July, with another $10 billion from revised returns due out next year, the Treasury Department said.
Customers bought groceries, flat-panel televisions and video games, while apparel and home goods were ``slightly negative,'' the company said. Consumers are spending ``more cautiously'' as stimulus checks end, Eduardo Castro-Wright, the Bentonville, Arkansas-based retailer's head of U.S. stores, said in a statement.
Sales at U.S. stores open more than a year grew 2.6 percent last month, the smallest gain since March, the International Council of Shopping Centers said Aug. 7.
Car Sales
Consumers aren't buying expensive items like automobiles, reflecting slumping confidence and weakening household finances. Cars and light trucks sold at a 12.5 million annual pace in July, the fewest since 1993, according to industry data compiled by Bloomberg News.
Spending, which has grown every quarter since 1992, may stall in the last three months of this year after growing at a 0.6 percent annual pace from July to September, according to economists surveyed by Bloomberg from Aug. 1 to Aug. 8. Figures from Commerce on July 31 showed spending grew at a 1.5 percent pace in the second quarter.
The world's largest economy will expand at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to economists surveyed.
A downturn in commodity prices that began in mid-July and has continued this month indicates cost pressures may abate.
Federal Reserve policy makers last week held their key lending rate unchanged at 2 percent and signaled that interest rates will stay where they are until next year as they wait for slowing growth to cool inflation.
The central bank said price increases are of ``significant concern,'' while noting that ``downside risks to growth remain.'' Policy makers also dropped a reference to ``diminished'' dangers to growth that was found in their June statement.
Bloomberg Survey
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Import Retail Retail Business
Prices Sales ex-autos Inv.
MOM% MOM% MOM% MOM%
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Date of Release 08/13 08/13 08/13 08/13
Observation Period July July July June
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Median 1.0% -0.1% 0.5% 0.5%
Average 1.0% -0.1% 0.5% 0.6%
High Forecast 2.0% 0.6% 1.0% 1.0%
Low Forecast 0.0% -1.0% -0.2% 0.1%
Number of Participants 51 75 70 51
Previous 2.6% 0.1% 0.8% 0.3%
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4CAST Ltd. 1.5% -0.3% 0.4% 0.8%
Action Economics 0.4% 0.5% 1.0% 0.7%
AIG Investments 1.5% -0.1% 0.5% 0.7%
Allianz Dresdner Economic --- 0.0% --- ---
Argus Research Corp. 0.5% 0.5% 0.7% 0.3%
Banc of America Securitie --- 0.2% 0.5% 0.4%
Bank of Tokyo- Mitsubishi 1.7% -0.3% 0.4% 0.6%
Bantleon Bank AG 1.0% -0.1% 0.4% ---
Barclays Capital 1.2% -0.5% 0.3% ---
BMO Capital Markets 1.0% 0.2% 0.7% 0.4%
BNP Paribas 2.0% -0.4% 0.8% 0.5%
Briefing.com --- 0.0% 0.5% 0.5%
Calyon --- 0.1% 0.5% 0.7%
CFC Group --- -0.2% 0.4% 0.6%
CIBC World Markets 1.0% -0.1% 0.7% ---
Citi 1.5% -0.3% 0.6% 0.7%
ClearView Economics --- 0.0% 0.4% 0.5%
Commerzbank AG --- 0.2% 0.5% 0.5%
Credit Suisse 1.0% -0.2% 0.5% 0.5%
Daiwa Securities America --- 0.1% 0.6% ---
DekaBank 1.8% 0.0% 0.4% 0.6%
Desjardins Group 0.7% 0.1% 0.4% 0.4%
Deutsche Bank Securities 1.0% 0.1% 0.2% 0.5%
Deutsche Postbank AG 0.7% 0.1% 0.5% ---
Dresdner Kleinwort --- -0.4% 0.4% 0.5%
DZ Bank 1.0% 0.2% 0.7% ---
First Trust Advisors 0.9% -0.3% -0.2% 0.7%
Fortis 1.3% -0.6% --- 0.4%
FTN Financial --- -1.0% 0.1% ---
GCI Capital --- 0.5% 0.3% ---
Global Insight Inc. --- -0.3% 0.5% ---
Goldman, Sachs & Co. --- -0.5% 0.3% ---
H&R Block Financial Advis 1.2% -0.2% 0.4% 0.6%
Helaba 0.7% 0.0% 0.5% ---
Horizon Investments 0.5% 0.0% --- 0.4%
HSBC Markets 0.9% -0.4% 0.2% 0.7%
IDEAglobal 1.3% -0.2% 0.4% 0.3%
Informa Global Markets 1.2% -0.2% 0.5% 0.3%
ING Financial Markets 0.9% 0.0% 0.5% 0.5%
Insight Economics --- -0.2% 0.2% 0.8%
Intesa-SanPaulo --- 0.4% 0.7% ---
J.P. Morgan Chase 0.5% -0.3% 0.5% 0.9%
Janney Montgomery Scott L 1.8% -0.3% 0.8% 0.7%
JPMorgan Private Client 1.5% 0.6% 0.4% 0.5%
Landesbank Berlin 0.5% -0.2% 0.7% 0.4%
Landesbank BW 0.0% -0.4% --- ---
Lehman Brothers 1.0% -0.2% 0.5% 0.5%
Lloyds TSB 1.2% 0.3% 0.6% 0.4%
Merk Investments 1.8% -0.3% 0.2% 0.4%
Merrill Lynch 1.0% 0.1% 0.8% 0.7%
MFC Global Investment Man 0.7% 0.0% 0.4% 0.1%
Moody's Economy.com 1.2% -0.2% 0.2% 0.4%
Morgan Stanley & Co. --- -0.4% 0.4% 0.9%
National Bank Financial --- -0.2% 0.2% ---
National City Corporation 0.8% --- --- 0.7%
Natixis 1.4% 0.3% 0.8% ---
Nomura Securities Intl. --- -0.3% 0.5% ---
Nord/LB --- -0.1% 0.4% ---
PNC Bank --- 0.2% 0.7% 0.2%
RBS Greenwich Capital --- -0.5% 0.5% 0.8%
Ried, Thunberg & Co. 1.8% -0.4% 0.5% 0.7%
Schneider Trading Associa 0.9% -0.2% 0.0% 0.3%
Scotia Capital 0.4% -0.2% 0.3% ---
Societe Generale --- -0.3% 0.6% ---
Standard Chartered --- 0.1% 0.4% 0.4%
Stone & McCarthy Research 1.0% -0.1% 0.4% 0.7%
TD Securities --- -0.1% 0.4% ---
Thomson Financial/IFR 0.5% 0.0% 0.5% 0.7%
UBS Securities LLC 1.9% -0.7% 0.2% 1.0%
Unicredit MIB 0.3% 0.1% --- ---
University of Maryland 1.0% 0.2% 0.6% 0.4%
Wachovia Corp. --- -0.3% 0.6% ---
Wells Fargo & Co. 0.4% 0.5% 1.0% ---
WestLB AG 1.0% 0.4% 0.6% ---
Westpac Banking Co. 0.5% -0.5% 0.1% 0.7%
Wrightson Associates 1.8% -0.4% 0.5% 0.7%
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To contact the reporter on this story: Bob Willis in Washington bwillis@bloomberg.net
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