Retail Sales Improve in December on Price Increases, Boosting Holiday Sales

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Retail sales (measured by prices) ROSE 0.33 percent or $1.8 billion in December;
  • Retail sales for November were revised down slightly to show an increase of $527.8 million from October instead of the originally reported $528,0 million.
  • Sales improved at every store category, offsetting a $1.37 billion drop in auto sales;
  • Percentage sales increases were led by a 2.8 percent increase at gasoline stations (where prices declined by 1.7 percent) followed by a 1,6 percent increase in sales at clothing stores;
  • Non-store retailers (essentially online sales) accounted for 12.6 percent of all retail activity in December, up from 12.2 percent in December 2018;
  • All retail activity was up 5.9 percent year-year in December – compared with 3.5 percent in November — while the Consumer Price Index rose 2.3 percent from December 2018 to December 2019.

 Trends:

  • Total retail sales improved month-month in all but two months in 2019 compared with 2018 when sales fell month-month in six of 12 months;
  • BLS reported the number of retail jobs ROSE in December for the third straight month (after seven straight months of decline),

Data source: Census Bureau  

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Consumer spending – measured by retail sales grew $1.8 billion in  December producing a  gain of 4.7 percent for the November-December holiday shopping season over 2018.

The largest (percentage) gain in sales came at furniture stores consistent with the year-end uptick in both new and existing home sales. Appliance stores registered a 0.6 percent December increase, wiping out the 0.3 percent dip in November.

The Census Bureau report on retail activity is not adjusted for price changes which means an increase in prices shows up as an increase in sales, assuming no change in volume. Witness gasoline station sales which rose 2.8 percent in December though the average price of a gallon of gasoline fell 1.7 percent suggesting consumers may have reacted to the lower prices by driving more during the holiday season.

The 3.3 percent year-year increase in furniture store sales in December, followed year-year gains in both new- and existing-home sales though those sales increases have not pushed up sales at appliance stores.

The increase in sales also reflects higher prices from tariff increases in the Administration’s ongoing efforts to improve the nation’s trade deficit by hiking tariffs on goods (and materials) especially those from China.

Consumer spending represents about two-thirds of the economy and retail sales about 55 percent of consumer activity. The retail report suggests good news for fourth-quarter GDP as retailers head into the holiday shopping season though many large retailers have already announced cutbacks.

Hear Mark Lieberman every Friday on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 6:20 am Eastern Time. You can follow him on Twitter at @foxeconomics.  

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