Retail sales disappoint

Retail sales in April fell 0.4% from the prior month, and excluding autos, fell 0.5%. I like to pull out gasoline station sales, which dropped a steep 2.3%, in order to get a clearer picture of how consumers are spending, but ex-autos and gasoline, sales were still down 0.3%.

The losses come on top weakness in March and are disappointing given that consumer confidence has been showing signs of improvement lately and Easter fell well into April. And that should have provided some support for retailers.

There have been recent signs that the pace of the recession is slowing, but job losses have been steep and uncertainty abounds, so consumers continue to focus on bulking up their savings. Since consumer spending accounts for almost 70% to total economic activity, we'll likely need to see some life at the cash registers before we see a meaningful recovery.

Forecasters had anticipated little change in the headline number and a 0.2% drop in sales ex-autos.