WASHINGTON — Economic growth in the U.S. continued to decline, as most retailers reported weakening conditions over the last month, the Federal Reserve Board said Wednesday in its Beige Book report.
Most of the districts tracked in the anecdotal report said business conditions were “weak, soft or subdued” and consumer purchasing was slow. According to the businesses interviewed, “purchasing concentrated on necessary items and retrenchment in spending.”
Most districts reported rising food, energy and commodity costs were still putting pressure on pricing for consumer goods, despite a decline or slowing of the increases in some sectors.
Boston, St. Louis, Chicago and Dallas all reported mixed or only slightly altered retail sales and consumer spending. Philadelphia, Minneapolis, Richmond and San Francisco said sales were weak or declining in recent weeks. Atlanta also reported weaker-than-expected sales.
The only bright spots were close-to-plan sales in New York and slight improvements reported in Cleveland and Kansas City.
Apparel sales did not fare well. Notable declines in spending on apparel and jewelry came in Chicago, Dallas and San Francisco. Retailers in all three districts reported consumers were trading down to discount brands and reducing their discretionary spending as a result of rising food and energy costs. Retailers in those districts and also in Philadelphia said that in general consumer shopping patterns were shifting from traditional department stores and specialty stores to the discount channel.
One retailer said consumers in Philadelphia were “sticking to the basics” as they started back-to-school shopping, which contributed to the decreasing sales at department stores and apparel retailers even as discount stores received a small bump.