American shoppers eagerly reached for their wallets and credit cards in December to spend far more than expected, figures from the Department of Commerce indicated Wednesday.
Retail sales in the U.S. rose 0.6 percent compared with the previous month, far above the 0.2 percent forecast. Compared with a year ago, sales were up 5.6 percent.
Sales of cars and trucks helped boost the figure. Absent sales at car dealers, retail sales were up 0.4 percent. This was still twice the 0.2 percent forecast.
Retail sales excluding gas station and auto sales rose 0.6 percent, also twice as much as projected. Excluding only gas stations, sales were up 0.7 percent.
Sales were flat at restaurants and bars. Excluding gas, autos, and restaurant sales, retail sales rose 0.6 percent.
The sales figures are seasonally adjusted to take account of surging holiday shopping. They are not adjusted for inflation.
Sales were up three percent at department stores and 1.3 percent at the broader category of general merchandise stores. Sales at clothing stores rose 1.5 percent. The category of stores that includes bookshops, sporting goods stores, and hobby shops saw a 0.3 percent rise in sales.
Grocery store sales rose 0.2 percent. Sales at home and garden centers were up 0.4 percent.
Sales fell at appliance and electronics stores. Furniture store sales were also down, likely reflecting depressed home sales volumes due to higher interest rates.
Online sales rose 1.5 percent.
The much stronger-than-expected sales figures suggest that a tight labor market is supporting consumer resilience, which in turn supports higher demand for labor. This “virtuous circle” of employment and spending, however, could mean that inflation remains higher than the Federal Reserve’s two percent target.
Fed officials have said they are closely watching incoming data to determine when they might be able to start cutting interest rates. The December retail sales data weigh against cuts in the near term.
Sales in the “retail control group”—sales that are used in the official estimates of economic growth—rose 0.8 percent for the month, much more than expected. The prior months’ control group sales were revised up from a 0.4 percent gain to a 0.5 percent gain. Together these figures are likely to push up estimates for economic growth in the fourth quarter of last year.
