Retail sales turn downward to the tune of 1.2% in September, taking the DOW with it, slipping another 733 points for 8% loss at 8,577.91. This shows the contained weakness in the market even as more bailout plans are announced world wide.

“Economic activity slowed across the country, according to a report from the Federal Reserve. And the chairman of the Fed, Ben S. Bernanke, warned in a speech that a recovery will not happen right away.”

As the crisis continues in two the holiday season. Many investors are fearful of major corporation, the effect that the markets will have on there workers and shareholders and the hard times that both will face in the coming months.

Breakdown: American Consumer

• Months of coping with soaring gasoline prices
• Enormous losses in the stock market and an uncertain financial future
• The recent decline can in the heart of the back-to-school shopping season, which second only to the Christmas Holiday shopping season.
• Federal Reserves beige book shows that spending decreased in all 12 metropolitan districts included in the report

“Businesses have become more pessimistic about the economic outlook.”

Breakdown: Sales

• Motor vehicle sales plummeted and took the biggest hit last month, falling 4 percent
• Orders tapered off at industrial companies.
• The real estate market remained stagnant and credit was tight.
• Discount and dime stores reported more buyers,
• Department stores sales fell 1.5 percent.
• Producer Price Index, fell 0.4 percent in September on energy prices

As our economy has moved almost exclusively to service oriented jobs, the decline in the consumer spending could have extreme consequences on the labor market.

“There can be no doubt now that the economy is in recession,” Ian Shepherdson of High Frequency Economics wrote in a note. “It will be there awhile.”

The decline in retail sales could spur the Federal Reserve to cut interest rates to battle against the slow down, however Bernanke has warned, that we could be facing a extended period of difficulty.  

Since the credit crisis started over a year ago, and due to the falling dollar, American companies have made up the difference with a dependence on international sales. However with the downturn in Europe and Asia those avenues might soon disappear.

Breakdown: Business

• Businesses / wholesalers paid 0.4 percent more for finished goods in September
• Producer prices are up 8.7 percent, a big jump and a sign of faster inflation.
• Outside of gasoline, prices are up 4 percent for the year.
• The Empire State (conditions in manufacturing) survey dropped to minus 24.6 in October, was 7.4 in September

Read Article: Retail Sales Fall 1.2% in September