Retail sales fell 0.6 percent in May, the biggest decline in four months, the government said yesterday in a report that raised new concerns among economists about a possible recession.

The Commerce Department said sales dipped to a seasonally adjusted $124.0 billion last month after a 0.2 percent increase in April.

Since February, retail sales have been essentially flat as consumers, burdened by high debt levels and weak personal income growth, have cut back sharply on purchases of discretionary items such as cars and furniture.

Consumer spending, which accounts for two-thirds of overall economic activity, has been the driving force behind the nation's recovery from the 1981-1982 recession.

Spending this year is expected to increase by 2 percent, half the 1986 growth rate. Analysts said if this scaled-back forecast proves too optimistic, then the recovery could be in substantial danger.

"The retail sales report makes me nervous. I would have liked to have seen more activity outside of autos and we just didn't get it," said Sandra Shaber, economist at the Futures Group, a Washington forecasting firm. "If consumers are more seriously tightening their belts, then that could cause a recession."

The weakness last month was led by a big 3.8 percent drop in auto sales, the largest monthly decline in this category since January. Excluding autos, retail sales would have risen a tiny 0.3 percent, but analysts said most of this advance came in higher prices rather than in an increased volume of sales.

"The retail sales figures look pretty weak," said Bruce Steinberg, a senior economist at the New York investment firm of Merrill Lynch & Co. "Consumer spending will rise much more slowly than it did in 1986 because income growth is very weak and savings are virtually nonexistent. That is having a significant constraint on consumer spending."

Deborah Johnson, senior economist at Prudential-Bache Securities Inc. in New York, predicted overall economic growth, as measured by the gross national product, probably would not top 2 percent this year. That would be slower than the 2.5 percent GNP growth in 1986, a year in which the overall economy was held back by a slump in manufacturing.

"Now we are beginning to see a little bit of an upturn in the industrial sector, but that will probably be offset by a weak consumer," she said. "We are not worried about a recession right now, but if interest rates push up a lot higher, you would have to begin to worry."

The 0.6 percent drop in retail sales in May was the biggest decline since a record plunge of 7.1 percent in January. That plunge reflected the impact of the new tax law, which caused consumers to make big-ticket purchases in December to take advantage of expiring tax benefits.

Sales of furniture and other home furnishings fell 0.8 percent last month after a 0.5 percent decline in April, while sales at hardware stores edged up 0.3 percent in May after a 3.2 percent drop in April.

The total category of durable goods, items designed to last three or more years, fell 2.5 percent in May after a 0.1 percent gain in April.

Sales of nondurable goods were up 0.6 percent in May after a 0.2 percent increase in April.

In this category, sales at department stores and other general merchandise stores rose 0.8 percent in May after a 0.5 percent rise in April.

Sales at apparel specialty stores were up 1.3 percent, the biggest increase of any category, followed by a 0.8 percent increase in sales at gasoline stations. Analysts said both gains were heavily influenced by rising prices.

Sales at food stores were up 0.3 percent while sales at restaurants climbed 0.6 percent.