STORY: In a further sign that the U.S. economy is slowing, retail sales fell more than expected in December, pulled down by declines in purchases of motor vehicles and a range of other goods.
That puts consumer spending and the overall economy on a weaker growth path heading into 2023.
But in the current bad-news-is-good-news climate on Wall Street, investors in early trading Wednesday welcomed the news – and sent stocks higher on the hope that the broad drop in sales, together with subsiding inflation, would encourage the Federal Reserve to further scale back the pace of its interest rate increases next month. The U.S. central bank is engaged in its fastest rate hiking cycle since the 1980s.
Retail sales are mostly goods and are not adjusted for inflation. December’s numbers – which declined 1.1% overall – showed that few categories were immune. Auto sales fell 1.2%, while receipts at service stations tumbled 4.6%. Online retail sales dropped over a percent, as did electronics and appliance store sales. Furniture plummeted 2.5%.
Among the outliers: sales at sporting goods and book stores, which edged up fractionally, as did building material and garden equipment suppliers.
December's decline was likely in part the result of goods prices falling during the month. Holiday shopping also began as early as October for some inflation-weary consumers who took advantage of early discounts.
Data for November was also revised to show retail sales dropping 1.0% instead of .6% as previously reported.