In a surprise for economists, U.S. retail sales held steady in December, signaling a slowdown in consumer spending as the country heads into the new year.
The flat reading followed a 0.6% rise in November, the most recent data released by the Commerce Department’s Census Bureau. Forecasts had expected a 0.4% increase, so the unchanged figure was below expectations. The bureau is still catching up on releases that were delayed by last year’s government shutdown.
Retail activity had been robust despite consumers feeling uneasy about the economy. Rising prices from tariffs and a softer labor market have squeezed savings, with the household saving rate slipping to a three‑year low of 3.5% in November from 3.7% in October. The rate has dropped from a peak of 31.8% seen in April 2020. Meanwhile, household wealth has surged, buoyed by a strong stock market rally and still‑high home prices.
When analysts look at core retail sales—excluding automobiles, gasoline, building materials and food services—the December data shows a 0.1% decline after a downwardly revised 0.2% gain in November. These core figures are closely tied to the consumer‑spending component of gross domestic product.
That dip, combined with the downward revision to November, could prompt economists to trim fourth‑quarter estimates for consumer spending and GDP. Consumer spending grew briskly in the third quarter, driving the economy’s 4.4% annualized growth during that period. The Atlanta Federal Reserve forecasts GDP to rise at a 4.2% rate in the fourth quarter. A delayed advance estimate of fourth‑quarter GDP will be released by the government next week.
