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    U.S. Retail Sales Plunge

    September numbers came in much worse than expected.

    WASHINGTON

    U.S. retail sales plunged in September in the wake of the devastating attacks on New York City and Washington, posting their sharpest drop in at least nine years, the government said yesterday.

    The drop would have been much worse had it not been for a spike in fuel sales.

    The only categories to post gains were basic consumer necessities. Sales at convenience stores and supermarkets rose 0.5 percent while sales of health and personal care items increased 0.8 percent. Gas station receipts rose 3.0 percent, the biggest gain since April, the report said.

    Retail sales fell 2.4 percent overall, led by declines in purchases of autos, building supplies and electronics, the Commerce Department said. Excluding the auto sector, sales were off by a smaller 1.6 percent. Commerce said the drops were the largest since the government began compiling its retail data in its current form in February 1992.

    The data are likely to fan fears that the U.S. economy, already faltering before the assaults on the World Trade Center and the Pentagon, has tipped into recession. Analysts had expected consumer spending, which makes up two-thirds of economic activity, to have taken a hit as Americans stayed indoors in the wake of the attacks. But the September numbers came in much worse than expected.

    Analysts surveyed by Reuters had expected sales to fall by 0.8 percent overall and by 0.6 percent excluding the auto sector. "It's a genuine shocker...I don't think anyone anticipated a decline of this magnitude," said Wayne Ayers, chief economist at FleetBoston in Boston.

    Washington policymakers have already taken a few steps to try to prop up the consumer sector. The federal government has approved $40 billion in spending for disaster recovery, improving security and to aid the hard-hit airline industry. The Bush administration has said it wants an additional $60 billion to $75 billion, mostly in tax cuts, to provide further stimulus to the economy.

    The Federal Reserve has cut short-term interest rates nine times this year and by a full percentage point since Sept. 11. Analysts widely expect they will cut rates again at their next meeting on Nov. 6.

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