December retail sales drop 1.9% after early holiday peak

NEW YORK – Americans, beset by a lack of product choice, inflated prices and the arrival of omicrons, slashed their spending sharply in December after an early fall shopping boom brought boost this year’s holiday shopping season.

The US Commerce Department said on Friday, the US Department of Commerce said retail sales fell 1.9% seasonally adjusted in December compared with November as sales rose 0.3%. . Sales jumped 1.8 percent in October as shoppers, worried about product shortages, began their holiday shopping. However, retail sales last month were up 16.9% from December 2020, the Commerce Department said on Friday. For the full year of 2021, sales spiked 19.3% year over year.

The drop in spending was widespread across many sectors. Department store sales fell 7%, restaurant sales fell 0.8% and online sales fell 8.7% month-over-month, according to the report.

Omicron was identified by the World Health Organization in late November, and the Commerce Department’s December report was the first to document some of its effects on consumer behavior.

The monthly retail report only covers about a third of total consumer spending and doesn’t include money spent on things like haircuts, hotel stays or airline tickets, all of which are trending downwards. decrease when anxiety about COVID-19 soars. In November, restaurant sales rose 1% – the industry’s best gain since July.

Industry analysts suspect that shoppers who waited until the last minute and didn’t find what they wanted and took the card, or purchased a gift card, won’t show up in retail data until those cards that is changed.

There is also a unique era in which we live that has skewed some economic indicators. Many economists argue that the seasonal adjustment of retail sales has been hit by the pandemic, which has rattled Americans’ spending patterns. The seasonal adjustment is intended to account for the usual spike in holiday shopping in December. This year, however, due to the notorious shortages, Americans are starting to shop for the holiday early, and the seasonal adjustment could spruce up any December holiday season.

And Americans this year did not reduce spending. They are spending money differently, but they are spending more, not less.

The National Retail Federation is examining last month’s sales figures and will release reports on Friday for November and December. The nation’s largest retail trade group has predicted record growth record in the range of 8.5% to 10.5%, compared with the same period last year.

Mastercard SpendPulse, which tracks all types of payments including cash and debit cards, reported late last month that holiday sales jumped 8.5% from Nov. December 24 from a year earlier. That’s the fastest pace in 17 years.

Lydia Boussour, US economist at Oxford Economics, said: “Consumer spending will remain the cornerstone of economic growth this year, but the short-term path will change amid the schools landscape. Omicron compounds are on the rise”. Boussour believes that after a soft patch in the first quarter, spending will pick up again in the spring due to strong wages and savings.

Stephen Stanley, chief economist at Amherst Pierpoint, agrees, pointing out a strong labor market and massive pent-up demand and “a pile of extra cash to spend.”

Stanley predicts: “People will spend again as the Omicron wave fades.

The omicron variant has led to widespread worker shortages that have people complaining of illness, including in the retail sector, and a supply shortage has limited what gets it stocked on store shelves. . Shops and restaurants have cut their operating hours or remain closed on the days they were previously open.