According to the Fed, sky-rocketing fuel costs and a shaky job market have not stopped Americans from spending. The April Commerce Report released in Washington today said U.S. consumers spent more than twice what economists had forecast, excluding car sales, Bloomberg reported.
A 0.2 percent overall drop in retail spending–led by the auto industry’s 2.8 percent decline–in the first quarter of the year coupled with better-than-expected sales at discount chain Wal-Mart indicate that consumers are flocking to discount stores and holding out on purchases of big-ticket items.
Though department store sales dropped 0.1 percent, spending on clothing, electronics, and even furniture were up in April.
But the lukewarm retail news was not enough to keep stocks from plummeting following reports of a less-than-stellar performance of the U.S. housing market and reduced profit-forecasts for Wall Street’s biggest firms. The National Association of Realtors announced that housing prices dropped in two-thirds of U.S. cities in the first quarter of 2008.
Shares in Bank of America, Morgan Stanley, and J.P. Morgan all fell in morning trading.