Retail Sales Unexpectedly Crashed in December

WILMINGTON, DELAWARE - JANUARY 14: U.S. Vice President-elect Kamala Harris (R) looks on as U.S. President-elect Joe Biden (L) lays out his plan for combating the coronavirus and jump-starting the nation’s economy at the Queen theater January 14, 2021 in Wilmington, Delaware. President-elect Biden is expected to unveil a stimulus …
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U.S. retail sales declined sharply in December, as holiday shoppers stayed away amid surging coronavirus infections and the aftermath of Joe Biden’s presidential victory.

Excluding car and gasoline sales, retail sales fell 2.1 percent in the final month of 2020, data from the Commerce Department showed Friday. The prior month’s figure was revised down to show a 1.8 percent decline from the initial estimate of 0.8 percent, which means December was a bigger decline from a lower starting point.

The size of the downturn in sales caught economists by surprise. The consensus estimate was for just a 3-tenths of a percentage point decline.

Overall retail sales also declined by more than expected. These fell 0.7 percent for the month, worse than the flat to one-tenth of a point decline forecast. The prior month was revised down from a drop of 1.1 percent to a 1.4 percent decline.

Excluding vehicles but including gas, sales fell 1.4 percent, below the one-tenth expected decline. The prior month was revised down from of 0.9 percent decline to a 1.3 percent contraction.

Sales in the so-called “control group”—which excludes sales at auto dealers, building-materials retailers, gas stations, office supply stores, mobile homes, and tobacco stores—fell 2 percent, worse than the 0.2 percent decline expected. Many economists and investors consider the control group figure a more precise measure of consumer spending. This figure is a component of the personal consumption expenditure gauge used to calculate GDP.

As has frequently been the case throughout the pandemic, the economic effects have been uneven. Sales of autos and parts rose 1.9 percent in December and were 10.1 percent higher than the year ago level. Sales at electronics and appliance stores fell 4.9 percent and were 16.6 percent lower than December 2019, an indication that the pandemic took a steep toll on holiday shopping in these stores.

Sales in non-store retailers fell 5.8 percent but were 19.2 percent above last December. Sales were down on a monthly basis in November as well but 26.2 percent above the prior November.

Sales are bars and restaurants fell 4.5 percent in December and were down 21.2 percent from last year, the second worst year-over-year decline.

The worst year over year decline was in department stores, where sales were down 21.4 percent. Compared with the prior month, sales fell 3.8 percent.

Sales at home improvement and garden stores rose 0.9 percent and were up 17 percent compared with the year-ago figure. Sales at furniture stores fell 0.6 percent but were 3.1 percent from a year ago. Grocery store sales dipped 1.4 percent for the month but they are up 8.9 percent compared with last year.

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