Holiday Sales Up, December Sales Down, Go Figure

According to the National Retail Federation, total holiday retail sales, which include November and December sales, increased 4 percent to $616.1 billion, which was in line with NRF’s projected forecast of 4.1 percent growth. In addition, non-store holiday sales, which is an indicator of online and e-commerce sales, grew 6.8 percent to $101.9 billion.

The U.S. Commerce Department, which does include gasoline, however, said on Wednesday that December retail sales decreased 0.9 percent seasonally adjusted month-to-month and decreased 3.2 percent unadjusted year-over-year. Falling gasoline prices also weighed on the figures. But even excluding the 6.5 percent plunge in receipts at service stations, which was the largest since December 2008, retail sales were down. U.S. retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, tempering expectations for a sharp acceleration in consumer spending in the fourth quarter.

Economists had expected only a 0.1 percent drop. Against the backdrop of a strengthening labor market and lower gasoline prices, they said sales should bounce back in January, with some saying December’s decline could be revised away.

In December, a so-called core sales gauge that strips out automobiles, gasoline, building materials and food services, fell 0.4 percent after a 0.6 percent rise in November.

Economists had expected this metric, which corresponds most closely with the consumer spending component of gross domestic product, to rise 0.4 percent last month. Consumer spending accounts for more than two-thirds of U.S. economic activity.

December’s decline prompted some economists to lower estimates for consumer spending in the final three months of 2014 and cut their GDP growth forecasts by as much as 0.3 percentage point to between a 3.0 and 3.4 percent annual pace.