December sales at U.S. retailers fell more than twice as much as forecast as rising unemployment caused consumers to retrench. The 2.7 percent decrease, the sixth consecutive drop, extended the longest string of declines on record, the Commerce Department said today in Washington. Purchases excluding automobiles slumped 3.1 percent, the most since records began in 1992. The loss of 2.6 million jobs and declining home and stock values are squeezing all American households, hurting retailers from Wal-Mart Stores Inc. to Macy's Inc. The figures will serve as a reminder to lawmakers of the urgency to enact President-elect Barack Obama's stimulus proposals to combat the recession. ``Consumers are pulling back,'' Michael Gregory, a senior economist at BMO Capital Markets in Toronto, said before the report. ``The first half is going to be bleak in terms of consumer spending and economic activity.'' Retail sales were projected to fall 1.2 percent after an originally reported 1.8 percent drop the prior month, according to the median estimate of 78 economists in a Bloomberg News survey. Forecasts ranged from declines of 3.5 percent to 0.3 percent. Sales fell 0.1 percent for all of 2008 compared with the prior year, the first decrease on record. November's decline was revised to 2.1 percent from a previously estimated fall of 1.8 percent. Today's report showed declines in 11 of the 13 major categories tracked by the government, led by a 16 percent plunge at gasoline service stations that partly reflected the slump in fuel costs. The drop at grocery stores was the biggest since April 2002 and the decrease at restaurants was the largest since the terrorist attacks in September 2001. Only Increases Only health and beauty stores and a miscellaneous category saw increases last month. Purchases of expensive goods are falling as banks restrict access to credit. Auto sales fell 36 percent in December from the same month last year, capping the industry's worst year since 1992. Same-store sales dropped 2.2 percent in the last two months of 2008, making it the worst holiday shopping season in almost four decades of record keeping, the International Council of Shopping Centers said last week. The first half of this year will also be ``extraordinarily challenging,'' Wal-Mart Chief Executive Officer H. Lee Scott told a retailers' convention this week in New York City. ``Some people are giving up eating out; some people are giving up movies; some people are giving up other things like shopping,'' Scott said. ``Those are fundamental changes that will continue.'' Obama Plan Obama, who takes office Jan. 20, is proposing a two-year recovery plan that includes about $300 billion in tax cuts for individuals and businesses and infrastructure spending aimed at creating or saving 4 million jobs. ``It's not too late to change course -- but only if we take immediate and dramatic action,'' Obama said in his weekly radio address on Jan 10. ``Our first job is to put people back to work and get our economy working again.'' Americans are scrimping as unemployment last month rose to 7.2 percent, the highest level in almost 16 years. Job losses are likely to continue for most of this year, economists said. The plunge at filling station in part reflected a 43 cent-per- gallon drop in the average cost of gasoline last month. Excluding gas, retail sales fell 1.4 percent. Consumer Slump The U.S. economy shrank at a 0.5 percent annual pace from July through September as Americans reduced purchases at a 3.8 percent annual rate, the first decline in consumer spending since 1991 and the biggest in 28 years, the government said last month. The economic slump probably worsened in the fourth quarter as declines in business investment and construction intensified and consumers continued to pull back.

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