U.S. consumers cut retail spending in the midst of the holiday season as the country faced an increase in coronavirus infections.
Retail sales, a measure of purchases at stores, restaurants and online, fell 0.7% seasonally adjusted in December from the previous month, the Commerce Department said Friday. This marked the third consecutive month of falls and November retail sales were revised downwards to 1.4%, after a stretch of growth last spring and summer.
Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said December sales were “an absolute disaster.” Still, he said that “no matter how much we fall in the short term, the assumption in the financial markets is that we will recover once the pandemic is over.”
Spending declined in online retailers, a category that includes companies like Amazon.com Inc., bars and restaurants, and in electronics, groceries and department stores, as consumers cut face-to-face and online purchases. Consumers spent more on home improvements, health and personal care stores, and clothing and gasoline.
According to the National Retail Federation, holiday sales increased by 8.3% compared to the same period last year, surpassing the commercial group’s estimate of an increase of 3.6% to 5.2 %. Home and online improvement retailers made big gains, while sales at clothing chains and department stores (which historically tend to do well during the season) continued to decline. Holiday sales exclude the sale of gasoline and cars, and measure year-on-year gains for the combined period from November to December.