Falling gas prices exaggerate drop in spending in November WASHINGTON (MarketWatch) - With gasoline prices plunging and auto sales on life support, U.S. retail sales dropped 1.8% in November, the fifth straight decline, the Commerce Department reported Friday. Retail sales - which account for about a third of final demand - were down 7.4% compared with a year earlier. The big drop was in line with expectations by economists for a 2.1% decline. Sales fell a revised 2.9% in October and a revised 1.6% in September. But the extent of the decline was exaggerated by an historic drop in retail gasoline prices in November. Excluding the record 14.7% drop in sales at gas stations, retail sales fell 0.2%. Many retail sectors reported their biggest sales increases in years, after seasonal adjustments and adjustments for trading days. Auto sales fell 2.8% in November, confirming reports from the automakers that sales sank to the lowest levels in decades. Excluding autos, retail sales fell 1.6%, the fourth straight decline. Excluding both autos and gas, retail sales increased 0.3%, the first increase since July. Retail sales account for about half of consumer spending. Ahead of the report, economists at IHS Global Insight figured that consumer spending would likely fall at a 4.5% annual pace in the fourth quarter, after adjusting for inflation. That would be the sharpest decline since 1980. Details Retail chain-stores reported the weakest monthly sales on record, but the government data don't back that up. One difference: The government adjusts its figures for the timing of the Thanksgiving holiday, while the stores don't. General merchandise store sales rose 1.3%, including a 2.1% gain at department stores, the biggest gain in three years. Sales at clothing stores increased 0.8%. Sales at stores selling leisure-time goods, such as books and guns, increased 2.8%. Sales at electronics and appliance stores rose 2.8%, the biggest gain in nearly three years. Sales at furniture stores rose 0.2%, the biggest increase in six months. Sales at hardware stores fell 1.2%. Sales at food stores rose 0.3%. Sales at health and personal care stores increased 1%, the best in two years. Sales at restaurants and bars increased 0.2%. Sales at nonstore retailers, such as online stores and catalogs, fell 1.3%.

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