Retail sales tumble in May for first time in 8 months

Retail sales unexpectedly tumbled by 1.2 percent last month, the largest decline in eight months, creating new worries that the economic recovery is lacking a foothold. 

Consumers cut spending across the board for the first time since September 2009, when sales dropped 2.2 percent, the Commerce Department said Friday. 

Economists had expected a slight increase in spending, which had been building steam and aiding the nation's economic recovery during the past several months, despite high levels of unemployment and a stock market shaken by the European debt crisis. 

Year-over-year sales were up 6.9 percent, as April sales numbers were revised up to 0.6 percent, better than the 0.4 percent estimated gain. 

Still, retail sales have been up and economists have urged the public not to panic over Friday's figures. Only if sales continue to drop over the summer would analysts need to revise downward economic growth forecasts.

Employment and income growth will need to improve to bolster consumer spending and, in turn, aid the nation's economic recovery, analysts have said. 

Consumer spending accounts for 70 percent of total economic activity. A 3.5 percent increase in consumer spending resulted in a 3 percent growth in gross domestic product in the first quarter of 2010, the biggest increase in three years.  

Meanwhile, business inventories rose for the fourth-straight month in April — 0.4 percent, according to a separate Commerce Department report. Business sales also increased in April, by 0.6 percent, for the 13th-consecutive month.