Recovery rocked by US retail spending slump

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Official figures in America showed retail sales fell 0.3 per cent in December, the first decline in three months, as shoppers spent less on cars and electrical goods.

Analysts were hoping for an increase of 0.5 per cent and warned that the recovery could falter if consumer spending does not take up the slack when government spending is reined in.

Boris Schlossberg of GFT Forex in New York said: "Will consumers be able to take over from the government and replace demand that has come so far from government spending? If the consumer is unable to do that, it's going to pose some significant risks to the global recovery story."

Another report, by Fitch Ratings, found that American shoppers defaulted on store-branded credit cards at near-record levels during the holiday. Fitch managing director Michael Dean said: "US consumers remain under stress on a number of fronts, most notably on the employment front."

But others pointed to the strong performance in shopping malls in November when sales rose by an impressive 1.8 per cent.

Rob Carnell of ING in London said: "We do not believe that this is evidence of a genuine slowdown as the US heads into 2010. Indeed, 2010 is likely to look strong, buoyed by more supportive fiscal and ongoing loose monetary policy. We are not so optimistic about 2011."