US retail sales climbed in December, capping a strong holiday season and underscoring robust consumer demand despite economic headwinds. The value of purchases rose 0.4%, building on a revised 0.8% increase in November, according to Commerce Department data released Thursday. Control-group sales, a critical component of GDP calculations, surged 0.7%, marking their strongest gain in three months. Notable gains were seen in categories like furniture and sporting goods, while auto sales rose 0.7%, driven by heightened incentives and anticipation of policy changes under President-elect Donald Trump.
The retail sector’s resilience was bolstered by wage growth outpacing inflation, though higher living costs remain a concern. Retail sales advanced 3.8% year-over-year from December 2023, defying predictions of a sharp slowdown. However, the data, unadjusted for inflation, raised questions about whether increases reflect higher prices rather than stronger consumer activity. Meanwhile, initial jobless claims rose more than expected last week, but the four-week average fell to its lowest since April, signaling stability in the labor market.
Market Overview:- Retail sales rose 0.4% in December, following a revised 0.8% increase in November.
- Control-group sales, a key GDP measure, climbed 0.7%, the highest in three months.
- Year-over-year retail sales grew 3.8%, showing continued consumer resilience.
- Auto sales advanced 0.7%, supported by incentives and anticipated policy shifts.
- Spending on furniture and sporting goods showed notable increases.
- Restaurant and bar sales declined 0.3%, marking the largest drop since early 2023.
- Tariff-related price hikes may distort retail sales data in coming months.
- Fed policymakers may consider resuming rate cuts in March, earlier than expected.
- Upcoming PCE data will provide inflation-adjusted insights on consumer spending.
- December retail sales growth of 0.4%, following a revised 0.8% gain in November, highlights robust consumer demand despite economic headwinds.
- Control-group sales surged 0.7%, indicating strong momentum for fourth-quarter GDP and signaling resilience in core consumer spending categories.
- Year-over-year retail sales growth of 3.8% defied predictions of a slowdown, reflecting wage growth outpacing inflation and boosting consumer purchasing power.
- Auto sales rose 0.7%, supported by heightened incentives and optimism surrounding anticipated policy changes under the Trump administration.
- Strong holiday season performance from retailers like Lululemon and Urban Outfitters underscores the sector’s ability to navigate inflationary pressures effectively.
- Retail sales data, unadjusted for inflation, raises concerns that increases may reflect higher prices rather than genuine growth in consumer activity.
- Restaurant and bar sales declined 0.3%, marking the largest drop since early 2023, signaling uneven spending patterns across sectors.
- Tariff-related price hikes could distort retail sales data in the coming months, complicating assessments of true consumer demand.
- Initial jobless claims rose more than expected last week, pointing to potential vulnerabilities in the labor market despite a stable four-week average.
- Cautious forecasts from major retailers like Macy’s highlight ongoing challenges in sustaining growth amid inflationary pressures and shifting consumer preferences.
Control-group sales expanded at an annualized rate of 5.4% over the past three months, suggesting solid momentum for fourth-quarter GDP following a robust third quarter. While some retailers like Macy’s (M) issued cautious forecasts for the current quarter, others, including Lululemon (LULU) and Urban Outfitters (URBN), posted strong holiday sales. These mixed signals highlight ongoing challenges and opportunities in the retail landscape as consumers navigate inflationary pressures.
As personal consumption expenditures data scheduled for Jan. 31 approaches, analysts expect more granular insights into inflation-adjusted spending patterns. With Federal Reserve officials cautiously optimistic about cooling inflation, the December retail sales report reinforces expectations of stable interest rates in the near term while keeping the door open for potential rate cuts by March.
