Unexpected Stagnation in US December Retail Sales, Lackluster Finish to the Holiday Season

Retail sales in the United States unexpectedly stagnated in December, indicating that consumers are being more cautious with their spending at the end of the year. Data from the U.S. Commerce Department on Tuesday showed that retail sales, not adjusted for inflation, remained essentially flat after a 0.6% increase in November. Sales excluding auto dealers and gas stations also remained unchanged. Among the 13 retail categories, 8 categories saw decreases, including clothing stores and furniture stores. Sales at auto dealers also declined. Meanwhile, spending at building material stores and sporting goods retailers increased. These data indicate that consumer spending momentum is weakening as the holiday shopping season nears its end. Despite economists' expectations that this year's tax refunds will support demand in early the year, households remain dissatisfied with high living costs and concerns about the job market persist. The breadth of consumer spending is also concerning. The wealth created by the rising stock market may stimulate demand, but there are signs that non-essential spending by low-income Americans, who mainly rely on moderate wage growth, is not as strong.