In December of 2018 retail sales had the largest drop in nine years. This drop points to a decrease in consumer spendings, but economists say that it’s unlikely that the numbers will represent the trend of future months.
A Long-Awaited Report
The December retail report had been delayed over a month by the government’s partial shutdown in January. On February 14th the U.S. Census Burea finally released an announcement concerning the retail and food service sales for December of last year. The United States Commerce Department has not yet announced when they will be releasing the January 2019 retail report.
Core retail sales managed to drop 1.7% in December; this is excluding sales in the gasoline, cars and food categories. [1] This is a jump from November, where the core retail sales had climbed 1%. The decline in sales seems to be pointing towards less consumer spending than usual despite the holiday season. Consumer spending makes up over two-thirds of economic activity.
Drop in Retail
The Commerce Department said that retail sales had dropped 1.2% to $505.8 billion. This was a large plunge from most economist expectations of an increase of 0.1%.
“In one line: Unbelievable,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “These numbers are astonishing, and impossible to square with the Redbook chain-store sales survey, which reported surging sales in December and a record high in the week of Christmas, on the back of the plunge in gasoline prices.” [2]
Economists calculate that the economy grew 2.7% in the fourth quarter. Although the government shutdown was expected to lose billions from the gross domestic product at the beginning of 2019, it only affected a small part of December. “The shutdown was only reflected a scant amount in December so, unfortunately, this number arrived mostly on its own,” said Austan Goolsbee, who served as chairman of the Council of Economic Advisers during the Obama administration. [3]
Notes:
- ^“Census Burea” https://www.census.gov/retail/marts/www/marts_current.pdf (go back ↩)
- ^“GDPNow.” 14 Feb. 2019, www.frbatlanta.org/cqer/research/gdpnow.aspx. (go back ↩)
- ^Heeb, Gina. “‘Unbelievable’: Retail sales collapsed by the most since 2009 in December.” markets.businessinsider.com, 14 Feb. 2019, markets.businessinsider.com/news/stocks/retail-sales-fall-by-most-since-2009-in-december-2018-2019-2-1027953728?utm_source=feedly&utm_medium=webfeeds. (go back ↩)
