Until last week, everyone believed that strong retailers (Amazon, Target, Walmart, et al) did quite well during the holidays while weaker ones (J.C. Penney, Sears, et al) did not. Overall, however, expectations for the industry numbers were high with various organizations including Mastercard, the National Retail Federation and others forecasting and/or reporting sales gains in a range between 4.3 percent and 5.1 percent for the last two months of 2018. So, last week’s Census Bureau report that U.S. retail sales fell 1.2 percent in December, the largest monthly drop in nine years, has many scratching their heads.
NRF reported that, with the numbers for December in, total holiday sales increased only 2.9 percent overall, well below the association’s forecast of a sales gain between 4.3 percent and 4.8 percent. Mastercard reported sales increasing 5.1 percent between Nov. 1 and Dec. 24.
“All signs during the holidays seemed to show that consumers remained confident about the economy,” said Matthew Shay, president and CEO of NRF, in a statement. “However, it appears that worries over the trade war and turmoil in the stock markets impacted consumer behavior more than we expected. There’s also a question of whether the government shutdown and resulting delay in collecting data might have made the results less reliable. It’s very disappointing that clearly avoidable actions by the government influenced consumer confidence and unnecessarily depressed December retail sales.”
The Census Bureau’s data shows many retail sectors posting sales gains in November and December, with online growing the fastest at 11.5 percent and sporting goods experiencing the biggest decline at -13.5 percent.
A Wall Street Journal article reports that conflicting data makes it difficult to read the economic tea leaves. The Federal Reserve reported that industrial production was down in January, even though consumers were more optimistic in February, according to a University of Michigan poll. The New York Federal Reserve recently reported that total household debt in the U.S. rose 0.2 percent in the fourth quarter, surpassing the previous highest level in the third quarter of 2008.
- 2018 holiday sales grew 2.9 percent amid turmoil over trade policy and delay in data collection – National Retail Federation
- Retail sales sink 1.2% in December in the worst plunge in nine years – MarketWatch
- Worst retail sales drop in 9 years is ‘every bit as bad as it looks’ – Yahoo Finance
- Smattering of Contradictory Data Confounds Economists – The Wall Street Journal
- Center for Microeconomic Data – Federal Reserve Bank of New York
- Mastercard SpendingPulse: U.S. Retail Sales Grew 5.1 Percent This Holiday Season – Mastercard