Retail sales fell in December, with online sales falling the most

Retail sales in the United States fell 1.9% in December.

Gabby Jones/Bloomberg

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U.S. retail sales fell 1.9% month-on-month in December, showing a slowdown in U.S. holiday spending as the Omicron variant spread and how fast the rise prices has changed the way people spend.

Economists forecast sales growth of 0.1%, according to FactSet. Retail sales, excluding autos and gasoline, rose 0.6% in November, compared with a 1.5% rise in October, according to the Census Bureau. Retail sales increased 16.9% year over year in 2021.

Online sales fell sharply by 8.7%. Other categories down in December from the previous month include electronics stores, which were down 2.9%, car dealerships, which were down 0.7%. Furniture and home stores fell 5.5%, and restaurant and bar sales fell 0.8%.

While the December report showed an unexpected drop in retail sales following the spending catapult, November’s data showed the downturn should be short-lived. In simpler terms: “Don’t panic”, as

Wells Fargo

the economists wrote on Friday.

Consumers have long been expected to bring forward their holiday shopping to get ahead of any supply chain backlogs, economists say. And while the spike in coronavirus cases from the Omicron push is likely having some effect, most economists, including Federal Reserve policymakers, believe consumers are increasingly learning to live with the virus. and that epidemics have less of an effect on behavior.

“Those looking for confirmation of an Omicron-related slowdown will take today’s drop in retail sales as evidence, but it’s a drop we’ve been anticipating since our first holiday sales forecast in September,” said Tim Quinlan, senior economist at Wells Fargo. , wrote on Friday.

The University of Michigan consumer sentiment for the United States fell to 68.8 in January 2022, the second lowest level in a decade and below FactSet’s forecast of 70.0. The final reading for December was 70.6. The metrics are designed to capture the mood of US consumers and signal insights into near-term consumer spending plans. In early January, three-quarters of respondents ranked inflation, relative to unemployment, as the most serious problem facing the United States

In a Bankrate survey of 2,372 American adults in November, more than half of respondents said they noticed higher product-related prices in October.

“While there’s not much to like about the December report, October and November results were so strong that fourth quarter retail sales still rose an impressive 17.1 % year over year,” wrote Bankrate analyst Ted Rossman. barrons Friday morning. “The big question is where do we go from here. Especially if inflation takes its toll and pent-up demand declines.

With inflation weighing on consumer sentiment, surveys show, a squeeze in real incomes from rising prices is unlikely to have dampened spending in December, chief economist Ian Shepherdson said. at Pantheon Macroeconomics. He argued that “it’s just not possible to make a judgment like that based on a month-long report.”

Additionally, Shepherdson noted, consumers at all income levels are sitting on an abundance of excess savings that should drive sales going forward. “Lack of cash is not the issue, so we expect a strong rebound in sales once the Omicron wave passes,” he wrote in a research note on Friday. “January is probably a write-off, but February and March will be much better.”

“Yeah, it’s worse than expected, but put it in perspective and put it on a stacked basis,” said Columbia Threadneedle analyst Mari Shor. Barrons. “The results reflect the supply chain challenges with omicron and I really believe they are temporary.

She says she thinks retailers will be able to bounce back much faster than they did at the start of the pandemic when supply chain issues first set in.

Write to Logan Moore at logan.moore@barrons.com and Megan Cassella at megan.cassella@dowjones.com


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David A. Albanese