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US holiday retail sales stagnate in December
Retail spending in the United States remained flat during the critical holiday shopping season last December, defying expectations and fueling worries about a potential economic cooldown, according to a Commerce Department report released Tuesday.
Shift from recent spending trends
The unchanged sales figures break a streak of stronger consumer activity in previous months, despite growing pessimism about the economy. Americans had continued to spend steadily until December, when a weakening job market, persistent inflation, and slower wage growth appeared to dampen holiday purchases.
Retail sales showed no growth from November, following a 0.6% increase the prior month. Economists, however, urged caution in interpreting the December dip as a sign of lasting decline.
Key economic indicators ahead
The retail sales data, delayed due to a government shutdown last year, arrives as other major economic reports loom. These include Wednesday's labor market update and next week's fourth-quarter GDP estimates, which could clarify the health of the world's largest economy amid lingering concerns.
Spending declines in tariff-exposed sectors
Several consumer categories saw notable drops in December. Furniture store sales fell 0.9% month-over-month, while clothing retailers experienced a 0.7% decline. Overall, December sales rose 2.4% year-over-year, down from November's 3.3% annual gain.
Consumer spending drives more than two-thirds of U.S. economic activity, making its performance a critical barometer of broader economic strength.
"Consumer spending has finally aligned with consumer sentiment-and not in a positive way," said Chris Zaccarelli, chief investment officer at Northlight Asset Management. "This month's figures show that consumers are no longer increasing their spending without pause."
Chris Zaccarelli, Northlight Asset Management
Labor market and policy factors in focus
While fears of a labor market slowdown eased recently, December's modest job growth and a 4.4% unemployment rate left questions about future spending. Economists like Michael Pearce of Oxford Economics suggest the spending lull may be temporary, citing potential boosts from tax refunds and last year's Federal Reserve interest rate cuts.
"We suspect this weakness is short-lived, with tax refunds and stabilizing labor conditions likely to spur a spending rebound this spring," Pearce said.
Michael Pearce, Oxford Economics
Economic divide widens
The retail report underscored a growing split between affluent consumers, who continue to spend amid record stock market highs, and lower-income households facing tighter budgets. The Labor Department reported Tuesday that wage growth slowed to 0.7% in the fourth quarter-the weakest pace in over four years.
Gregory Daco, chief economist at EY-Parthenon, noted a shift toward "necessity economics," with December sales rising for essentials like gasoline and building materials but falling for discretionary items such as electronics and apparel.
