WASHINGTON - Americans shopped less in July and more signed up for jobless benefits last week in a double dose of bad news for the economy just a day after the Federal Reserve said it saw a leveling out of the slump.
A Commerce Department report yesterday showed total retail sales edged down 0.1 percent after increasing 0.8 percent in June. Excluding motor vehicles and parts, sales fell 0.6 percent in July after rising 0.5 percent the previous month.
Analysts had expected a boost to retail sales from the government's "cash for clunkers" program and predicted a 0.7 percent advance in overall July sales.
They said the program - which gives consumers cash to swap aging gas guzzlers for new, more fuel-efficient models - had pulled spending away from other sectors.
The data, combined with a report from the Labor Department showing first-time applications for state unemployment insurance benefits rose 4,000 to a seasonally adjusted 558,000 last week, indicated the economy faces a slow and difficult recovery from the worst recession in decades.
In another indication of weak consumer demand, Wal-Mart Stores Inc. said yesterday that sales at stores open at least a year fell in the second quarter.
"The road to recovery will be bumpy ... it is likely to be unusually slow to get traction before accelerating to a more robust growth path next year. The consumer is not going to lead the recovery," said Stephen Stanley, an economist at RBS in Greenwich, Conn.
The decline in July retail sales was affected by a 2.1 percent drop in sales at gasoline stations. Excluding gasoline, retail sales nudged up 0.1 percent.
Sales were weak in nearly all areas of discretionary spending.