Retail sales in the United States rose more than expected in December.
Advance sales for retail and food services were $709.9 billion in December, up 0.6% from the previous month, and a 5.6% increase above December 2022 levels, the U.S. Census Bureau reported Wednesday. The consensus estimate for the month was a 0.4% increase, per Trading Economics.
Overall, U.S. retailers saw their biggest sales boost in three months, with the December increase being driven mostly by auto sales (+1.2%).
Other categories with month-over-month increases in December included nonstore retailers (+1.5%), clothing (+1.5%), general merchandise stores (+1.3%), miscellaneous store retailers (+0.7%), building materials and garden equipment (+0.4%), and food and beverages stores (+0.2%).
On the other hand, the categories with declining sales figures in December included health and personal care (-1.4%), gasoline stations (-1.3%), furniture (-1%), and electronics and appliances (-0.3%). Retail sales were unchanged at food services and drinking places, data in the report shows.
“Retail sales beat expectations yet again in December,” wrote Nationwide financial markets economist Oren Klachkin, reported Yahoo Finance. “Consumers were willing to spend during the holidays and will remain inclined to do so as long as real income gains more than offset the drag from elevated interest rates and tight lending standards.”
“We think this narrative will persist in early 2024 but then lose steam as the job market deteriorates,” Klachkin added.
Considering the relative strength of the economy and the typical consumer, Federal Reserve Governor Christopher Waller suggested Tuesday that the U.S. Central Bank was in no rush to start cutting rates, particularly as long as inflation remains on a downward trend.
“With economic activity and labor markets in good shape and inflation coming down gradually to 2%, I see no reason to move as quickly or cut as rapidly as in the past,” said Waller in a speech at the Brookings Institution in Washington.
Ultimately, Waller said the timing and number of rate cuts will be driven by “incoming data.”
