US Retail Sales Dipped in Dec.; Low Gas Prices Key Factor
WASHINGTON – Americans tapered off from shopping toward the end of the holiday season, while lower gasoline prices cut into overall retail sales in December.
The Commerce Department said Friday that retail sales dipped a seasonally adjusted 0.1 percent last month to $448.1 billion after having climbed a solid 0.4 percent in November.
The report shows consumer tastes shifting toward restaurants and online shopping. The extra savings from falling gas costs have yet to fuel large spending gains in other retail categories. Still, some economists viewed the sales data as a positive reflection of the 2.9 million jobs added in 2015.
“Consumers can’t be too cautious or pessimistic if they’re still spending on gym equipment, paddleboards, restaurants and a new coffee table,” said Jennifer Lee, a senior economist at BMO Capital Markets. “All of those new jobs must be helping.”
Sales fell in December at clothing, electronics outlets and general merchandise stores. But those declines were largely offset by spending at restaurants, online retailers, furnishers and sporting goods and building supply stores.
Bricklin Dwyer, an economist at the bank BNP Paribas, suggested that an unusually warm December likely hurt clothing store sales and encouraged spending on building supplies. He expects these trends to reverse as the weather has turned colder in January.
The main drag on retail sales remains lower prices at the pump. Sales at gas stations, which aren’t adjusted for changes in price in the government report, plunged 1.1 percent in December. Gas prices have continued to fall with the start of 2016. Oil is hovering around $30 a barrel, and many analysts expect the price to decline further.
Cheap gas has freed up cash in many household budgets. The average price of gasoline fell below $2 a gallon this week for the first time since March 2009, according to the Energy Department. The average household has an additional $660 to spend this year because of cheaper gas, according to the government.
This appears to have provided a modest boost to retailers. Excluding gas, retail sales were unchanged last month and advanced 3.9 percent from a year ago. Much of the gain has been concentrated at auto dealers and restaurants.
Sales at auto dealers revved up just 0.1 percent in December but posted a strong 6.3 percent annual gain. For 2015, U.S. auto sales hit a record high of 17.47 million, topping the prior record of 17.35 million set in 2000, according to industry reports.
Restaurants and bars have also profited. Spending at those businesses has climbed 6.5 percent from a year ago.
Economists watch the retail sales report closely because it provides the first indication each month of the willingness of Americans to spend. Consumer spending drives about 70 percent of the economy. Yet retail sales account for only about one-third of spending, with services such as haircuts and Internet access making up the remaining two-thirds.