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- US retail sales shrank 1.9% in December as the spending slowdown extended through the holidays.
- Economists expected spending to drop by 0.1%. The print follows a 0.2% jump in November.
- The report shows Americans’ demand continued to wane into 2022, hinting inflation could soon follow suit.
Spending at US retailers and restaurants plunged in December as the Omicron wave surged and spiking prices cut into Americans’ demand.
Retail sales tumbled 1.9% last month to $626.8 billion, according to Census Bureau data out Friday. That fell short of the median forecast of a 0.1% drop from economists surveyed by Bloomberg. It shows spending pulling back from the 0.2% gain seen through November and also marks the first month-over-month contraction in sales since July.
November’s spending total was revised to $639.1 billion from $639.8 billion.
The report continues a streak of deceleration in Americans’ spending after numerous record-high monthly sums. Several factors have fueled the slowdown. Shoppers aren’t enjoying the same stimulus support they did in early 2021, and it’s probable that much of the savings built up during lockdowns have been depleted.
December also saw coronavirus cases soar to new records as the highly contagious Omicron variant powered the pandemic’s latest resurgence. Daily case counts went parabolic in the final weeks of the month as travel picked up for the holiday season. While Omicron’s symptoms aren’t as severe as past variants’, its spread and amplified virus fears likely put a damper on spending.
Sky-high inflation also crashed into people’s spending plans. Prices grew 7% year-over-year in December, accelerating from the prior month’s 6.8% gain and marking the strongest inflation since 1982. While month-over-month inflation slowed to 0.5%, elevated readings throughout 2021 have cut into Americans’ recovery hopes and buying attitudes, particularly toward larger purchases like cars and homes.
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