Retail sales fell in December, the government reported Thursday, putting a damper on hopes that the holiday shopping season would boost figures.
The Commerce Department said total retail sales fell 0.3% to $353 billion last month, compared with November's upwardly revised 1.8% jump. Economists surveyed by Briefing.com had anticipated that December sales would grow 0.5%.
Consumer spending accounts for two-thirds of U.S. economic activity, and related reports such as retail sales are closely watched to determine whether a recovery is underway.
Sales excluding autos and auto parts fell by 0.2% from November. Analysts expected sales ex-autos to jump 0.3%.
The December might have been even lower without a stronger-than-expected holiday shopping season. A separate Thursday report from the National Retail Foundation said year-end holiday sales rose unexpectedly by 1.1% to $446.8 billion.
Given that the economy was so weak 12 months ago, the year-to-year increase was strong. December 2009 retail sales jumped 5.4% compared to the same month in 2008.
"[It's not] clear how much of this reflects a catch-up from the fantastically depressed post-Lehman period ... and how much represents a sustainable, if very modest, upturn," said Ian Shepherdson, economist at High-Frequency Economics, in a research note. "We suspect more of the latter."
The December data are not enough "to reach a definitive verdict" on the holiday sales season, Shepherdson said. The January report will be "hugely important" as well because it reflects holiday gift card spending and post-holiday sales.
Total sales for 2009 retreated 6.2% from 2008
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Two questions to ponder:
ReplyDelete1. is having our economy rely so heavily on consumption a good thing?
2. are there other directions we could go that are economically viable?
I think we have transformed our economy into a consuming one, where other countries and companies want access to our markets. However if that is all the US has, then it can not be healthy. The problem can be seen in Michigan now, if you rely to heavily on one thing, like the auto industry, then when that is hurting, you are sunk. The US needs to diversify its economy a bit more.
ReplyDeleteThats true, I agree with Nick's comment. But this will also pose a problem when we try to draw the line between how much consumer goods should we invest in as opposed to how much investment goods we should have.They both have their positive and negative consequences.
ReplyDeleteThis is an area where psychology plays a big role. The mentality of suddenly having to place stricter limits takes a toll on everyone and it seems it has just now begun to fade. However, I would imagine the holiday months would reattach people to that mentality, as people must stray from their newly developed spending schedules and habits to an entirely unpredictable spending time.
ReplyDeleteFrankly I'm not surprised December sales were down, but I'm hopeful for January.
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This is a big reason why are economy is where it is today. Relying the economy so much on consumer spending was never a good idea, because when you rely on one entity so much, and it fails, then all else will likely fail. As we began to fall into a recession, consumer spending decreased, which means that the economy continued to get worse as well. This is still a reason why the economy is continuing to hurt, because no one has the extra money to spend on new retailer's items anymore. There needs to be a way that we can shift the importance of consumer spending away from the economy, because if not, the economy will continue to stay where it is at, or even become worse in the near future. (A)
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