NEW YORK — In December, shoppers unexpectedly stopped spending money, finishing the holiday shopping season and the year on a low note.
The Commerce Department's data on Tuesday stunned economists who were expecting growth even though they were worried about job growth slowing down, President Donald Trump's tariffs, and other economic problems. And it made analysts wonder how buyers could still spend money after months of staying strong even while consumer confidence was falling.
The Commerce Department says that retail sales stayed the same in December as they were in November, when they went up 0.6%. Economists thought that December would see a 0.4% rise.
The report was late because the government was closed for 43 days.
The Commerce Department said that sales dipped 0.1% in October, gained 0.1% in September, and then jumped 0.6% in July and August and 1% in June.
The retail sales numbers, which don't take inflation into account, showed that a lot of different kinds of businesses saw drops, such as furniture and home goods stores and electronics and appliance stores.
Building goods and garden retailers had a good sales boost, which was one of the few good things. Gas stations and establishments that sell food and drinks witnessed slight increases in sales.
The snapshot only shows portion of consumer expenditure and doesn't include a lot of services, such hotels and flights. But the only service category that went down was restaurants, which fell by 0.1%.
The information comes at a time when Americans have been losing faith in the economy for months. Confidence really fell in January, reaching its lowest point since 2014. Americans are getting more and more worried about their financial future.
Chris Zaccarelli, chief investment officer for Northlight Asset Management in Charlotte, North Carolina, wrote in a study published Tuesday that "consumer spending has finally caught up with consumer sentiment, and not in a good way."
He said that consumer confidence figures have been low for months and that customers have been grumbling about how much things cost, but they still spent money.
But he went on to say, "The data from this month show that consumers are no longer spending more and more."
Thomas Ryan, an economist at Capital Economics in North America, also said the report was bad news. However, he thinks that consumption at the end of the first quarter of this year "may turn out to be a lot stronger than it currently looks at the start." This is because the bigger tax refund checks are expected to boost spending.
A lot of economic figures on jobs and prices will be out later this week, and economists will be keeping a close eye on them.
But the economics is hard to understand.
The economy is growing quickly. From July to September, the gross domestic product (GDP), which is the value of all the products and services produced in the country, grew at the fastest rate in two years. But the job market isn't great; since December, employers have added only 28,000 jobs a month.
After the COVID-19 lockdowns, there was a hiring boom from 2021 to 2023, during which they made 400,000 jobs a month.
On Wednesday, the agency will disclose the hiring and unemployment data for January. They are likely to show that businesses, government agencies, and organizations gained roughly 80,000 jobs last month, which is a little increase from the 50,000 jobs added in December.
Analysts will also look at the consumer pricing report that comes out on Friday. In December, prices for goods and services were the same as they were in November, when they went up by 0.3%. Economists say that if inflation slows down in the next few months, it might make it more likely that the Federal Reserve would lower its main interest rate later this year.
Some stores, like Walmart, are doing well because their everyday cheap costs have attracted customers from competitors. Others, however, are having a hard time.
As businesses restructure under bankruptcy protection or cut back on operations to focus on the most profitable ones, more and more outlets are closing.
On Monday, the company that runs about 180 Eddie Bauer stores in the U.S. and Canada filed for Chapter 11 bankruptcy protection. They said sales were down and there were a lot of other problems in the business.
Last month, the firm that owns Saks Fifth Avenue stated it was looking for bankruptcy protection. This was because competition was getting tougher and it had to take on a lot of debt to buy its luxury competitor, Neiman Marcus, just over a year ago. A few days later, the parent firm revealed it would be shutting down most of its Saks Off 5th locations.
Amazon revealed earlier this month that it would be closing almost all of its Amazon Go and Amazon Fresh stores within a few days. The company is focusing more on food delivery and its grocery store chain, Whole Foods Market.
