Holiday shopping slump: US retail sales fell in December
WASHINGTON (AP) -- U.S. retail sales stumbled last month in a sign consumers remained frugal even as gas prices declined and hiring picked up.
Retail sales fell a seasonally adjusted 0.9 percent in December, the Commerce Department said Wednesday. That's the largest decline since January. Gas station sales retreated sharply due to lower prices, but sales in most other categories also lost ground.
Excluding the volatile categories of gas, autos, building materials and restaurants, sales dropped 0.4 percent after rising 0.6 percent in November. Online and mail-order sales fell 0.3 percent, the most since April.
The figures suggest that stagnant wages are still weighing on many Americans. Average hourly pay slipped in December, the government said last week, and rose just 1.7 percent last year. That's only slightly ahead of the 1.3 percent inflation rate.
Americans may have also simply delayed spending their windfall from cheaper gas, economists said. Many analysts argued that December's weakness was likely temporary.
"This isn't the start of a collapse in activity ... as that doesn't fit with the strength of employment growth and consumer confidence," Paul Diggle, an economist at Capital Economics, said in a note to clients. "As such, retail sales will strengthen again before too long."
Retail sales figures for October and December were also revised lower, which could deal a blow to growth in the final three months of the year. Still, Diggle said he still forecasts healthy fourth-quarter growth of about 3 percent.
General merchandise stores, a category that includes department chains as well as big-box retailers such as Wal-Mart, said that sales fell 0.9 percent in December, the most in four years. Sellers of electronics, building materials and garden supplies, clothes and sporting goods all reported lower sales.
Restaurants were a rare bright spot with a 0.8 percent increase. Sales also rose at furniture, grocery and health products stores.
Retail sales rose just 4 percent for all of 2014, the weakest showing since 2009 when the recession ended. The drop in gas prices, however, contributed to that lower figure.
Lower gas prices have freed up money for consumers to spend elsewhere, raising expectations for the holiday shopping season. Sales at gas stations dropped 6.5 percent in December, the steepest drop in six years.
A gallon of gas costs an average of $2.12 a gallon nationwide, according to AAA. That is near the lowest level in more than five years and down from $2.58 just a month ago. AAA estimates that Americans spent $14 billion less on gas in 2014 than the previous year.
Some of those savings have gone toward purchasing new cars. Auto sales jumped 6 percent in 2014 to 16.5 million, according to Autodata. That was the biggest year for the industry since 2006.
However, purchases slowed in December from the previous month. Auto dealers and auto parts stores reported a 0.7 percent sales drop last month, following a big 1.6 percent gain in November.
Consumers may yet show signs of strength this year. There are nearly 3 million more Americans earning paychecks than a year ago, which ought to bolster spending going forward. The unemployment rate has fallen to a six-year low of 5.6 percent.
Measures of consumer confidence are at or near seven-year highs. Layoffs have fallen, providing greater job security. Americans have pared their debts, leaving their finances in much better shape.
And for richer Americans, the stock market has boomed in the past two years, providing additional wealth to spend.