Early Shoppers, Inflation Chill December Retail Sales

Retail sales for December fell 1.9%, more than economists had expected, as inflation, supply chain disruptions, and the renewed spread of COVID-19 discouraged shoppers.

Customers bought less at almost every kind of store including online ones. Nonstore retailers, which consist mostly of e-commerce and mail-order places, saw a decline of 8.7% from November. Clothing stores, sports and hobby stores, restaurants, electronics stores, and furniture stores all saw their sales drop, according to seasonally adjusted figures released Friday by the Census bureau. Overall sales were still 16.9% above what they were in December 2020, but economists took the report as a sign of slowing economic growth, at least in the short term. 

A few major factors have made it harder for shoppers to find the things they need lately. Manufacturers are still dealing with widespread supply chain problems and labor shortages, which have contributed to the highest inflation in decades. The price tags for almost everything are higher, and  people are thinking twice about dining out and other potentially risky activities with the omicron variant and the latest wave of virus cases. Many people saw these problems coming and did their holiday shopping early, which also hurt December sales, economists said. 

“American consumers closed 2021 on a very sour note,” said Sal Guatieri, senior economist at BMO Capital Markets in a commentary.

The bad news, however, could be taken with a grain of salt—the numbers may be distorted by problems with the way the bureau adjusts the numbers for seasonal patterns, Michael Pearce, senior U.S. economist at Capital Economics, wrote in a commentary.

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