Led by a sharp drop in automobile buying, retail sales fell 1.1 percent in June, the third consecutive monthly decline, the Commerce Department reported yesterday.
The dollar volume of sales last month, on a seasonally adjusted basis, was lower than last December even though prices have been rising at more than a 13 percent annual rate most of this year.
The resulting very steep drop in the real volume of consumer purchases is one reason many economists believe the nation is now in a recession. "We haven't had this kind of weakness since the last recession," said a Commerce economist who asked that his name not be used.
The last time there were three monthly declines in a row was from September through December 1974, as the nation entered the last recession.
Department store and gasoline sales also fell in June.So did sales at furniture stores and restaurants. Sales rose slightly at food stores and drug stores.
But all of those changes were dwarfed by what happened to auto sales. Car sales in April totaled $14.3 billion. They slipped to $14,0 billion in May, and then went down all the way to $12.9 billion in June.
Total sales in June were $70.6 billion, down from $71.3 billion in May and $71.4 billion in April.
June sales were up only 7 per cent from the year earlier level, while consumer prices rose more than 10 percent over the same period, economists estimate. The Consumer Price Index for June is now yet available for a precise comparsion.
The three-month decline of 2.1 percent more than wiped out the modest 1.5 percent increase in the first quarter of the year.
Most analysts blame the slump in car purchases to a combination of factors, including inflation, the likelihood of recession, and the gasoline shortage. CAPTION: Chart, Monthly Retail Sales, The Washington Post