Retail sales and inflation took a step backward in March, as dour consumer demand hurt the former and suppressed energy prices stalled the latter.

Retail sales and inflation took a step backward in March, as dour consumer demand hurt the former and suppressed energy prices stalled the latter.

U.S. retail sales fell 2.7% last month and will likely continue on a downward trend as job losses mount.  Total retail sales dropped to a seasonally adjusted 343.2 billion last month, the Commerce Department reported. That’s a decrease of 2.7% from the previous month and 9.8% decline from December 2007.

It comes as no surprise to anyone who has set foot in a mall this holiday season that retailers are struggling. The Sunday before Christmas, I went to Target in the early afternoon for some last minute gifts. When I went to checkout, the express line for shoppers with fewer than ten items was empty. I walked up, put down my items, and was out the door in less than two minutes. Great for me, not so great for Target (TGT).

We have almost made it to the Christmas break, but before we do, we have two days absolutely packed with reports. Tomorrow morning there will be five reports released, and Wednesday morning has three more.

Rick Pendergraft says we won’t see an economic recovery before one of the housing, auto or labour markets stabilize. Friday’s nasty unemployment data and earnings reports from GM (NYSE:GM), Ford (NYSE:F ) suggest that our hopes are resting on real estate.