LOS ANGELES AND WASHINGTON — New signs piled up Thursday that the ailing economy is taking another turn for the worse, with a mounting toll on ordinary Americans.
Retailers reported the worst October sales figures since at least 1971, a grim harbinger for the holiday shopping season. The report sent stocks lower for a second straight day, handing the Dow Jones index its biggest two-day percentage loss since Wall Street's October 1987 collapse.
Another dose of bad news is expected today, when the government reports on unemployment for October. Economists estimate that 200,000 or more jobs disappeared last month, about double the average this year. That would bring job losses to about 1 million in 2008.
"This is probably just beginning for the average worker and consumer," said Ed Leamer, director of UCLA's Anderson Forecast, who predicts that large job losses are likely to continue for five or six months.
"The consumer is going to do some serious belt tightening, which means that businesses won't sell as much and that means employment is going to be cut," Leamer said.
Americans are already reining in their spending. Sales at major chain stores surveyed fell by 0.9% last month compared with October 2007 -- and by 4.2% if discount king Wal-Mart Stores Inc. is excluded, the International Council of Shopping Centers said.
"These are awful numbers," said Michael Niemira, the council's chief economist. "All this concern about the financial markets caused consumers basically to freeze up any purchase that had a whiff of discretionary spending."
Based on October's numbers, Niemira lowered his holiday sales forecast to a 1% gain for the combined November and December period, down from his earlier estimate of 1.7% growth.
Luxury retailers in particular suffered, with high-end department store chains Neiman Marcus Inc., Nordstrom Inc. and Saks Inc. all posting double-digit declines.
Neiman Marcus is reducing inventory and marking down prices after suffering a staggering 26.8% sales decline, Chief Executive Burton M. Tansky said.
"We expect retail demand will remain weak for an extended period of time as our affluent customer reacts to the continuing volatility of the financial markets," he said.
On the other end of the spectrum, Wal-Mart exceeded expectations and reported a 2.4% sales increase, excluding fuel sales. But even the world's largest retailer is nervous.
