Dismal Holidays Over, but Retail Outlook Still Dim

President-elect Barack Obama has promised to push a sweeping economic stimulus program of around $800 billion through Congress in the next few weeks. But even with that assistance, economists say the country is facing a prolonged period of weakness.

Miguel Morales, 41, shops for toys at Wal-Mart, Thursday, Jan. 8, 2009, in Brooklyn, Ohio. Retailers...

Miguel Morales, 41, shops for toys at Wal-Mart, Thursday, Jan. 8, 2009, in Brooklyn, Ohio. Retailers reported dismal sales figures for December on Thursday as even Wal-Mart Stores Inc., one of the bright spots in the industry, finally buckled under the pressures of the deteriorating economy. (AP Photo/Tony Dejak)

(AP)

Many analysts believe the overall economy, as measured by the gross domestic product, plunged at an annual rate of 6 percent in the just-completed fourth quarter, after dropping 0.5 percent in the third quarter.

For December, nearly all areas of retail sales showed declines. Auto sales fell by 0.7 percent and are down a huge 22.4 percent from a year ago.

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Automakers closed out a dismal 2008 with General Motors Corp. having its worst year in nearly a half-century, and both GM and Chrysler LLC had to take emergency loans from the government's bailout fund. Analysts forecast further sales declines this year, given all the troubles facing consumers, with only a small rebound expected in 2010.

Excluding autos, retail sales were down a record 3.1 percent in December, reflecting the widespread weakness in most other areas, led by the big plunge at gasoline stations. But even with gasoline sales removed, retail sales were down a sizable 1.4 percent in December.

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AP Business Writers Mark Williams, Jeannine Aversa, Betsy Verecky, Mae Anderson and Ashley Heher contributed to this report.

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