U.S. economic growth last month showed a continued softening as retailers turned in generally subdued sales reports, according to the Federal Reserve Board’s Beige Book report.

This story first appeared in the March 6, 2008 issue of WWD. Subscribe Today.

Discretionary spending in particular was off in many districts. Most of the Fed’s 12 districts tracked in the report said retail activity over the last seven weeks dropped or missed expectations. Conversely, tourism in many districts continued to expand. Sales were anecdotally categorized by the report as “below plan, downbeat, weak or having softened.”

Apparel sales were strong in Boston, but notably soft in New York, Richmond, Va., and Philadelphia. One retail chain in New York singled out women’s apparel sales as especially slow. Several of the districts also said big-ticket items or home-related items showed declining sales.

Based on information from retail respondents in Boston, the report found that “sales of home-related and big-ticket items have consistently been down, while sales of apparel, shoes, accessories, televisions and sporting goods are strong. However, two respondents are concerned about credit market turmoil and its potential effects on their customers.”

Department stores in Richmond said sales were slow in late January and during the first three weeks of February, with President’s Day a “nonevent” in terms of sales. Valentine’s Day sales were off in the region as well. Store managers in Maryland and West Virginia also reported weakness in apparel sales for the month. Contacts in the ports near the district said imports, including apparel, were down sharply.

In Cleveland, the only sectors that didn’t show weakness were essential items like food and pharmaceuticals.

Atlanta retailers reported a generally positive sales outlook for the next several months, despite higher-than-expected inventories and a subsequent scaling back of orders, according to the report.

Weather patterns had an impact as well as economic factors. Sales in Chicago were adversely effected by slower income growth, weather and high energy prices, according to respondents. Discount stores and wholesale outlets in the district did well, but the report said luxury and discretionary spending suffered.

Sales of outerwear and cold-weather items were solid in the St. Louis and Kansas City districts. Kansas City retailers said the cold weather could have created some of the region’s softness, but blamed negative media reports about the economy for flagging traffic numbers.