Retail sales fall more than expected in December | Economy
Retail sales fell 1.9% in December, below expectations as shoppers purchased fewer electronics, furniture, sporting goods and clothing, the Census Bureau reported Friday.
Economists had predicted a decline of 0.1%. For the whole of 2021, sales increased by 19.3% compared to the level of 2020.
Analysts had expected a pullback from November’s revised 0.2% monthly increase, when consumers shopped early ahead of the Christmas season, worried about the availability of key items.
Adobe Digital Insights released its survey of online shopping during the holiday season earlier this week and found that there were 38 days from November when online sales reached $3 billion per day.
Vericast, which combines online activity with geographic location to analyze consumer spending habits, found customer confidence in the last month of 2021.
“For the most part, our customers were pretty bullish in December,” says Dave Cesaro, executive director of customer strategy. “But they are squeezed on the margins.”
Buyers understand that grocers, furniture stores and other retailers have to pay higher wages and prices for their products, Cesaro says, while understanding the delays caused by problems in the global supply system.
The omicron variant of the coronavirus emerged just as many retailers had optimized their businesses to deal with the new environment, he adds.
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Restaurants, in particular, have been upended by the spread of the highly transmissible variant. “They were really, really optimistic that things were going to be okay and, surprise, this thing called omicron happened.”
Product shortages and rising prices also weighed on spending, with consumer price inflation rising 7% in December.
Meanwhile, the fourth quarter earnings season has kicked off on Wall Street, with major banks posting strong numbers. JP Morgan Chase, for example, beat analysts’ estimates on a modest increase in revenue. CEO Jamie Dimon expressed confidence in the economy despite omicron’s surge.
“The economy continues to do well despite headwinds from the Omicron variant, inflation and supply chain bottlenecks,” Dimon said in the company’s press release. “Credit continues to be healthy with exceptionally low net charges, and we remain bullish on U.S. economic growth.”