U.S. retail sales did not move in December, an unexpected flat result that suggests consumer-led expansion softened as the year closed. The unchanged reading followed an unrevised 0.6% increase in November, according to the Commerce Department’s Census Bureau.
Economists surveyed by Reuters had been expecting a 0.4% rise for December. The Census Bureau continues to release data on a delayed schedule as it catches up from disruptions caused by last year’s government shutdown.
Shoppers had maintained relatively strong purchasing activity despite broad consumer unease driven by higher prices related to tariffs and signs of a softer labor market. That resilience has come at the expense of household buffers - the personal saving rate fell to 3.5% in November from 3.7% in October, marking a three-year low. By contrast, the saving rate peaked at 31.8% in April 2020.
Household balance sheets, however, have been supported by gains in asset values. The report noted a surge in household wealth, reflecting a robust rally in equities and persistently high home prices.
Measures of core retail sales - which exclude automobiles, gasoline, building materials and food services and align closely with the consumer spending component of gross domestic product - fell 0.1% in December. That followed a downward revision to November, which the Census Bureau now shows as a 0.2% gain instead of the previously reported 0.4% advance.
The combination of December’s dip in core retail sales and the revision to November could lead economists to reduce their estimates for fourth-quarter consumer spending and for GDP growth in that quarter.
Consumer outlays rose strongly in the third quarter, contributing substantially to an annualized 4.4% growth rate for the economy during that period. Forecasts for the fourth quarter remain elevated by some measures - the Atlanta Federal Reserve is projecting GDP growth at a 4.2% annualized pace for Q4.
The government is scheduled to publish its delayed advance estimate of fourth-quarter GDP next week, offering a more complete picture of how the recent retail data and revisions feed through to overall economic activity.
Additional context
- Retail sales are reported on a non-inflation-adjusted basis and primarily reflect goods purchases.
- Core retail sales are used as a proxy for the consumer spending component of GDP.