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US Retail Sales Fall by Record Amount

In yet another sign that the world's largest economy is sinking into recession, the Commerce Department said Friday that sales at U.S. retail stores fell by two-point-eight percent in October - the sharpest amount on record.

Economists watch retail sales closely because consumer demand drives about two-thirds of the U.S. economy.

Analysts blame falling sales on tight credit and worries about job security and falling home prices.

The economic slowdown has hurt demand for many products, including powerful high-end computers. One of the world's biggest makers of such computers, Sun Microsystems, says it will lay off as many as six-thousand people, or nearly one-fifth of the company's workforce.

A government report says U.S. businesses cut their inventories by two-tenths of a percent in September, as managers apparently worried that sales will be hurt by the weak economy.

Some members of Congress and other critics say the economic crisis grew in part from lax oversight of the financial system. Friday officials in Washington announced two efforts to keep closer watch over the troubled system.

President Bush nominated a federal prosecutor to watch for problems in the $700-billion rescue plan for the financial system. Neil Barofsky now heads efforts in New York to stop mortgage fraud and earlier worked on narcotics cases. His appointment needs confirmation by the Senate.

And officials announced plans to tighten regulations of complex and obscure financial instruments like derivatives and "credit default swaps" blamed for making the economic crisis worse.

Credit default swaps are a kind of insurance that pays lenders if borrowers fail to repay and they operate in a largely unregulated marketplace.

Some information for this report was provided by AFP, AP, and Reuters.