Please ensure Javascript is enabled for purposes of website accessibility
December Retail Sales Fall After Slipping in November
gvw_ap_news
By Associated Press
Published 1 year ago on
January 18, 2023

Share

Getting your Trinity Audio player ready...

Americans cut back on spending in December, the second consecutive month they’ve done so, underscoring how inflation and the rising cost of using credit cards slowed consumer activity over the crucial holiday shopping season.

Retail sales fell worse-than-expected 1.1% in December, following a revised 1% drop in November, the Commerce Department reported Wednesday. In October, retail sales ticked up 1.3%, helped by early holiday shopping

Auto sales declined as rising interest rates for auto loans crimped demand. That, and falling gas prices, helped to pull overall retail sales lower.

The FedĀ raised its key interest rateĀ in December for the seventh time in 2022 for exactly that reason as it tries to cool spending and inflation.

Yet even excluding sales from auto and gasoline, retail sales slipped 0.7%. Retail sales are not adjusted for inflation unlike many other government reports.

ā€œThere are cracks appearing in the resiliency that consumers have shown in 2022, as higher prices, interest rate increases and the uncertainty of the macroeconomic environment finally take their toll,ā€ Moodyā€™s Vice President Mickey Chadha said in a report.

Chadha noted that the low unemployment rate and wage gains have so far supported consumer spending, but in the coming months, Moody’s sees consumers increasingly being ā€œmore selective” in their spending and postponing purchases, putting a damper on retail sales in the first half of the year.

Sales fell in key gift-giving categories for the holiday season’s finale. Sales dropped 1.1% at electronics and appliance stores; furniture and home furnishing stores saw a 2.5% drop. And department stores suffered a 6.6% decline. Sales at online retailers fell 1.1%. Restaurants also saw a drop.

Spending had remained resilient despite a spike in inflation that began almost 19 months ago, but the capacity of Americans to continue that spending has ebbed.

Solid hiring, rising pay, and savings beefed up by government financial support during the pandemic enabled most Americans to keep up with rising prices. That government assistance has long ended, however, and some Americans have dipped into savings accounts since then. Credit card defaults are on the rise with some households slow to adjust their spending to a new reality.

Still, the job market continues to be a pillar of strength in the U.S. economy and wages are still rising, creating a conflict for the Fed, which needs to cool spending and hiring to control inflation.

Inflation does appear, at least at the moment, to be in retreat.Ā InflationĀ fell to 6.5% in December, the sixth consecutive month of declines.

On a monthly basis, prices actually slipped 0.1% from November to December, the first such drop since May 2020.

Goods are still a lot more expensive than they were last year, however, and that has begun to become evident in the bottom line for many major retailers. Stores have had to discount more heavily this season to get shoppers to buy.

Macyā€™sĀ tempered its quarterly sales outlook this month after customers spent less than expected during the lull between Thanksgiving weekend and the final days before Christmas. And upscale yoga pants maker Lululemon warned that profit margins for the fiscal fourth quarter will be squeezed as shoppers focus on discounts.

Another challenge retailers face is that shoppers are shifting more of their spending on travel and other experiences and away from stuff.

Bloomingdale’s Chairman and CEO Tony Spring noted earlier this week at a retail industry event that the chain is highlighting travel goods to grab more of the spending. It’s also spiffing up its mannequin displays to excite shoppers who are returning to stores after focusing on online spending during the height of the pandemic.

Later on Wednesday the National Retail Federation, the nationā€™s largest retail trade group, will release final holiday sales figures for November and December. The trade group’s officials said earlier this week that holiday sales will likely be at the low end of its forecasted range of 6% to 8%, a big slowdown from the blistering 13.5% increase last year when shoppers spent the money they had saved during the early part of the pandemic.

Major retailers including Walmart and Target release details on their fourth-quarter performances next month.

Jack Kleinhenz, chief economist at the National Retail Federation, expects companies to manage inventories more tightly in 2023 after being forced to heavily discount goods last year due to an enormous amount of unsold merchandise.

ā€œI think they are going to be very cautious because of what happened,ā€ Kleinhenz said.

The retail report released Wednesday covers only about a third of overall consumer spending and doesnā€™t include services such as haircuts, hotel stays and plane tickets.

RELATED TOPICS:

DON'T MISS

Stock Market Today: S&P 500 Sets a Record After Wall Streets Breaks Out of Its Lull

DON'T MISS

California Wants to Pay Doctors More Money to See Medicaid Patients

DON'T MISS

Federal Reserve Still Foresees 3 Rate Cuts This Year but Envisions Fewer Cuts in Future

DON'T MISS

US Drops in World Happiness Rankings as Those Under 30 Report Declining Well-Being

DON'T MISS

Top Former US Generals Say Failures of Biden Administration in Planning Drove Chaotic Fall of Kabul

DON'T MISS

US Defense Chief Vows Continued Aid to Ukraine, Even as Congress Is Stalled on Funding Bill

DON'T MISS

‘Gorilla Hail’ as Big as Softballs Hits Parts of Kansas and Missouri

DON'T MISS

Time for a Change: 66% of Americans Want to End Daylight Saving Time Ritual

DON'T MISS

United Airlines Plane Makes a Safe Emergency Landing in LA After Losing a Tire During Takeoff

DON'T MISS

Bill That Could Make TikTok Unavailable in the US Advances Quickly in the House

No data was found

Former Sen. Joe Lieberman, Democratsā€™ VP Pick in 2000, Dead at 82

15 hours ago

Trump Criticizes Judge and His Daughter After Gag Order in Hush-Money Case

16 hours ago

CA Insurance Market ā€˜in Chaos,ā€™ Says Former Insurance Commissioner. Can Lara Fix It?

16 hours ago

Stock Market Today: S&P 500 Sets a Record After Wall Streets Breaks Out of Its Lull

17 hours ago

House Speaker Mike Johnson Headed to Fresno on April 4

17 hours ago

Bredefeld, Smittcamp Debate the Salary of Valley Children’s CEO

17 hours ago

CA’s Liberal Government Has a Long History of Caving to Special Interests

17 hours ago

Corrupt Process? Bullard, Edison Parents Blast Handling of Superintendent Search

17 hours ago

Police Had About 90 Seconds to Stop Traffic Before Baltimore Bridge Fell. 6 Workers Are Feared Dead

19 hours ago

NBC Has Cut Ties With Former RNC Head Ronna McDaniel After Employee Objections, Some on the Air

19 hours ago

Supermom Carmi Is Ready to Be Embraced by Her Forever Family

Carmi, an incredible 1-year-old kitten mama, can be very gentle but can also get overstimulated and give love bites. Even her warm, honey-co...
Animals /

2 hours ago

Animals /
2 hours ago

Supermom Carmi Is Ready to Be Embraced by Her Forever Family

10 hours ago

Ukrainian Navy Says a Third of Russian Warships in the Black Sea Have Been Destroyed or Disabled

Composite image of President Trump and Devin Nunes
14 hours ago

Wired Wednesday: How Going to Work for Trump Turned Devin Nunes Into a Millionaire

15 hours ago

Former Sen. Joe Lieberman, Democratsā€™ VP Pick in 2000, Dead at 82

16 hours ago

Trump Criticizes Judge and His Daughter After Gag Order in Hush-Money Case

16 hours ago

CA Insurance Market ā€˜in Chaos,ā€™ Says Former Insurance Commissioner. Can Lara Fix It?

17 hours ago

Stock Market Today: S&P 500 Sets a Record After Wall Streets Breaks Out of Its Lull

17 hours ago

House Speaker Mike Johnson Headed to Fresno on April 4

MENU

CONNECT WITH US

Search

Send this to a friend