The U.S. Commerce Department announced Wednesday that national retail sales numbers are down 1.5 percent, despite the success of programs like Cash for Clunkers that recently boosted sales.

Local merchants say they have noticed a difference in shoppers' spending and most customers are buying only necessities. May Scasino, who owns La Moda clothing store, says customers are making smarter purchases to save money.

Terry Altan, who owns a jewelry store, says sales have dropped up to 35 percent. Altan is counting on the holiday season to keep her business afloat.

Commerce Department officials say the numbers indicate the economy is improving.