By Timothy R. Homan Dec. 12 (Bloomberg) -- Sales at U.S. retailers probably fell in November for a fifth straight month as a deteriorating labor market caused consumers to retrench, economists said before a report today. Purchases fell 2 percent last month, extending the longest decline since record-keeping began in 1992, according to the median estimate in a Bloomberg News survey. Other reports may show wholesale prices slumped, led by plummeting commodity costs, and consumer sentiment dropped to a 28-year low. The loss of almost 1.3 million jobs since August and record declines in home values have shaken Americans and prompted merchants to gird for what may be the worst holiday shopping season in four decades. Retailers from Toys “R” Us Inc. to Neiman Marcus Group Inc. are cutting prices to clear out bloated stockpiles. “U.S. consumers appear to be in the midst of a downward spasm,” said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York. “There is no longer any doubt that the U.S. economy is in the midst of the deepest industrial-world downturn of the post World War II era.” The Commerce Department’s sales report is due at 8:30 a.m. in Washington. Forecasts of the 73 economists surveyed ranged from declines of 0.7 percent to 4 percent. Excluding autos, purchases are projected to fall 1.8 percent, a fourth straight drop, according to the survey median. At 10 a.m., the Reuters/University of Michigan preliminary December consumer sentiment index is projected to fall to 54.8, the lowest level since 1980, according to the survey. Commodity Slump Also today, a Labor Department report at 8:30 a.m. may show prices paid to U.S. producers fell 2 percent in November, a fourth straight decline, reflecting plummeting costs for fuel and raw materials as demand slides, the survey showed. Sales of expensive goods are slumping as banks tighten lending rules. Auto purchases fell 37 percent in November from the same month last year, making it the worst month since 1982. Congress is trying to hammer out compromise legislation that will keep General Motors Corp. and Chrysler LLC from collapsing. Some Republicans are opposed to a proposed $14 billion bailout plan that GM and Chrysler say they need to keep from running out of cash by early next year. Neiman Marcus, the luxury retailer owned by Warburg Pincus LLC and TPG Inc., said this week that profit in the quarter ended Nov. 1 dropped after it used discounts to reduce inventories. Earnings this quarter will also be hurt because of higher markdowns as sales “remain weak for an extended period of time,” the Dallas-based retailer said in a regulatory filing Dec. 10. Mounting Joblessness Shoppers are spending less as the labor market weakens. The unemployment rate climbed to 6.7 percent in November, the highest level since 1993. Employers have cut 1.9 million workers from payrolls so far this year. Same-store sales in the U.S. fell 2.7 percent in November from a year earlier, the biggest drop since records began in 1969, the International Council of Shopping Centers said last week. Almost half of Americans plan to cut purchases this holiday season, and a quarter say they’ll spend a lot less on gifts than they did last year, according to a Bloomberg/Los Angeles Times poll conducted Dec. 6-8. Only 1 of 10 respondents plans to increase holiday purchases. Toys “R” Us, the largest U.S. toy-store chain, said it is putting on “very aggressive” promotions this holiday season to attract shoppers. Financial Crisis “We know that value is very important in this economic situation and we’re determined to be aggressive throughout the holiday season in offering that value,” Chief Executive Officer Gerald Storch said Nov. 28 in a telephone interview. “We knew that the economy was going to be soft. Obviously, no one had a crystal ball to know that we have a financial crisis like we’ve had.” Consumer spending fell last quarter for the first time since 1991, causing gross domestic product to contract at a 0.5 percent annual pace. The U.S. entered a recession in December 2007, according to a panel at the National Bureau of Economic Research that dates American business cycles. The economy will shrink for a record four consecutive quarters by the middle of next year and household spending will drop 1 percent in 2009, the most since 1942, according to the median estimates of economists surveyed this month. Bloomberg Survey =============================================================== PPI Core Retail Retail PPI Sales ex-autos MOM% MOM% MOM% MOM% =============================================================== Date of Release 12/12 12/12 12/12 12/12 Observation Period Nov. Nov. Nov. Nov. --------------------------------------------------------------- - Median -2.0% 0.1% -2.0% -1.8% Average -2.1% 0.1% -1.9% -1.8% High Forecast -0.7% 0.3% -0.7% -0.5% Low Forecast -3.7% -0.3% -4.0% -3.5% Number of Participants 72 70 73 69 Previous -2.8% 0.4% -2.8% -2.2% --------------------------------------------------------------- - 4CAST Ltd. -1.7% 0.1% -2.4% -2.4% Action Economics -3.0% 0.0% -1.7% -1.7% AIG Investments -2.7% 0.3% -2.5% -3.0% Aletti Gestielle SGR -2.0% 0.1% -1.9% -2.1% Ameriprise Financial Inc -2.0% -0.2% -1.2% -1.1% Argus Research Corp. -0.8% -0.1% -1.7% -1.2% Banc of America Securitie -1.8% 0.2% -1.9% -2.2% Bank of Tokyo- Mitsubishi -2.5% -0.3% -1.1% -1.0% Bantleon Bank AG -1.6% --- -1.8% -1.5% Barclays Capital -2.5% -0.1% -2.1% -2.0% BMO Capital Markets -2.5% 0.0% -2.0% -1.0% BNP Paribas -2.5% 0.1% -1.5% -1.1% Briefing.com -1.9% 0.1% -1.8% -1.5% Calyon -2.0% 0.1% -1.1% -1.5% CIBC World Markets -1.8% 0.1% -2.0% -2.1% Citi -1.8% 0.2% -1.8% -1.7% ClearView Economics -2.2% -0.2% -2.0% -1.2% Commerzbank AG -2.5% 0.2% -1.5% -1.8% Credit Suisse -1.5% -0.1% -2.5% -2.7% Daiwa Securities America -1.5% 0.1% -0.8% -1.2% Desjardins Group -3.7% 0.2% -2.3% -2.3% Deutsche Bank Securities -2.5% 0.0% -2.5% -2.0% Deutsche Postbank AG -1.8% 0.1% -2.0% -1.8% DZ Bank -2.0% 0.1% -2.0% -1.8% First Trust Advisors -2.6% 0.2% -1.3% -1.0% Fortis -2.5% 0.2% -2.0% --- FTN Financial -1.5% 0.1% -2.3% -2.2% Goldman, Sachs & Co. -1.8% 0.0% -1.4% -1.5% Helaba -1.0% 0.2% -1.7% -1.8% Herrmann Forecasting -2.0% 0.0% -1.8% -1.9% High Frequency Economics -2.5% 0.2% -2.5% -3.0% Horizon Investments -2.2% 0.0% -1.9% -1.6% HSBC Markets -2.6% 0.1% -2.0% -1.9% IDEAglobal -1.5% 0.1% -1.3% -1.6% IHS Global Insight -2.4% 0.1% -3.3% -3.3% Informa Global Markets -1.4% 0.1% -1.5% -2.0% ING Financial Markets -2.5% 0.1% -2.0% -1.6% Insight Economics -2.2% -0.1% -2.5% -2.0% Intesa-SanPaulo -1.9% 0.1% -2.2% -2.0% J.P. Morgan Chase -2.7% 0.1% -2.3% -2.2% Janney Montgomery Scott L --- --- -3.5% -3.1% Landesbank Berlin -0.7% 0.0% -0.7% -0.5% Lloyds TSB -1.5% 0.3% -1.3% -1.5% Maria Fiorini Ramirez Inc -1.8% 0.0% -2.0% -2.0% Merrill Lynch -2.6% 0.1% -3.0% -3.3% Mizuho Securities -2.0% 0.0% -2.0% -2.5% Moody’s Economy.com -3.3% 0.1% -1.4% -1.6% Morgan Keegan & Co. -2.6% 0.2% -1.3% -1.0% Morgan Stanley & Co. -2.0% 0.0% -1.2% -1.8% National Bank Financial -1.8% 0.1% -1.5% -1.5% National City Corporation -2.0% 0.0% -1.3% -0.9% Natixis -2.4% 0.1% -2.0% -1.8% Newedge -1.5% 0.1% -2.0% -1.5% Nomura Securities Intl. -0.8% 0.0% -1.0% -0.8% PNC Bank -3.0% 0.1% -2.5% -2.3% RBS Greenwich Capital -2.3% 0.0% -3.0% -3.2% Ried, Thunberg & Co. -1.8% 0.2% -2.0% -2.1% Schneider Foreign Exchang -1.2% 0.0% -2.0% -1.8% Scotia Capital -1.6% -0.2% -4.0% -3.5% Societe Generale -1.5% 0.1% -2.0% -2.0% Standard Chartered -1.9% 0.2% -2.0% -2.1% Stone & McCarthy Research -1.4% -0.2% -2.2% -2.2% TD Securities -2.3% 0.2% -1.5% -1.3% Thomson Financial/IFR -1.4% 0.2% -2.1% -1.5% Tullett Prebon -2.3% --- -2.2% --- UBS Securities LLC -2.1% 0.1% -1.7% -1.7% Unicredit MIB -2.0% -0.2% -2.5% --- University of Maryland -2.5% 0.2% -1.7% -1.6% Wachovia Corp. -2.8% 0.0% -1.5% -1.5% Wells Fargo & Co. -3.0% 0.0% -1.7% -1.7% WestLB AG -2.0% 0.2% -2.0% -1.7% Westpac Banking Co. -2.5% 0.1% -2.5% --- Wrightson Associates -1.8% 0.2% -2.0% -2.1% =============================================================== To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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