Retail sales fell 1.9 percent in December, the Commerce Department reported on Friday, reflecting a slowdown during an otherwise robust holiday shopping season that started earlier in the year for many consumers.
It was the first drop after four straight months of sales increases, though the gain in November slowed from October because of the lengthened holiday shopping season brought on by fears of product shortages and price increases. Total sales for October through December were up 17.1 percent from the same period a year earlier, according to the report.
Beth Ann Bovino, chief U.S. economist at S&P Global, said that although there was bound to be “headline shock” over a weaker number, the broader picture for retail sales has been strong over the past few months.
“This is not a sign of consumer weakness,” she said. “Given that households have relatively strong balance sheets with high savings levels and a strong job market with wages climbing higher, it seems that consumers are not necessarily closing their pocketbooks. They’re taking a brief pause.”
The retail sales report provides a data point on the mind-set of consumers after a report this week showed that inflation climbed to its highest level in 40 years at the end of 2021. Prices have increased as new variants of the coronavirus have exacerbated supply chain issues and robust consumer demand for goods.
Economists at Morgan Stanley had forecast retail sales to rise by 0.4 percent in December. Even though inflation topped the coronavirus as the No. 1 concern for consumers it surveyed in November, that “came with no dent to spending plans,” they said in a note last week.