The December Retail Sales numbers came in weaker than expected, up 0.1% compared to expectations of 0.3% gains. This compares to the November gain of 0.4%, which was revised upwards from the originally reported 0.2% level. ‘Core’ Retail Sales, which excludes automobile and gasoline sales data, also came in weaker than expected.
This is the weakest Retail Sales reading since May 2011 and runs counter to the recent trend of improving trends in the building blocks of consumer spending. Measures of consumer confidence have been moving up and the labor market has been steadily moving in the right direction.
The Retail Sales report is admittedly not a perfect proxy for consumer spending since it only includes ‘goods’ sales at retail establishments and leaves out the much bigger consumer outlays on ‘services’. But it nevertheless provides valuable clues to trend in consumer spending, which is the backbone of the U.S. economy.
Today’s Retail Sales report, coupled with the trend reversal in the jobless claims data, is disappointing. We have to see whether this is the start of a downtrend in U.S. economic readings or the typical erratic behavior of monthly economic data.
