
Retail sales data shows robust consumption despite cost concerns
Retail sales data shows robust consumption despite cost concerns

As warnings of “recession coming” and general economic malaise kept rearing up over the last couple of years, we’ve repeated some version of: “All hail the U.S. consumer.” That’s because consumers have saved the economic day, or spent to save it.
That’s confirmed again in the latest retail sales report from the Commerce Department. Overall sales at stores, car dealerships, gas stations and e-commerce sites were up 0.4% in December from the prior month and up a revised 0.8% in November to round out a pretty nice holiday shopping season.
Compared to a year earlier, consumers were spending a lot more — on cars, furniture and electronics.
Now, inflation is still a thing. Consumers remain not in the greatest mood, worried about the possibility of tariffs and more inflation to come.
But for all the worry through the fall about politics and inflation and interest rates, plus labor strikes and hurricanes, “consumers continued to spend at a buoyant pace, wrapping up the holiday season, capping off the year,” said economist Kathy Bostjancic at Nationwide.
“The consumer is really settling into a pretty stable space,” said Robert Frick at Navy Federal Credit Union.
He said spending in December was up nearly across the board. “Durable goods — the prices of those literally is coming down now, and that includes electronics. The fact people are spending more on those things just makes perfect sense.”
Now, not all increases in consumer spending are an economic good. One of the biggest jumps in December occurred at gas stations.
One reason: “Colder winter — much colder than we’ve seen in the last few years,” said Andrew Gross at AAA. “That puts a lot of upward pressure on particularly diesel. Because diesel-gas and home heating oil are the exact same thing.”
It’s not that folks are filling their tanks more often, said Gross. They’re driving less. “If there’s less demand, why are they paying more? Well, it’s because gasoline prices are a little higher,” he said.
That hits some consumers harder than others. And it’s not those at the upper end of the income spectrum. For them, times are good. “When you feel wealthier, you tend to spend more,” said Bostjancic at Nationwide. And they are spending more largely because stock and home values have soared.
By contrast, “middle-class and lower-income households are still really struggling. And they may have continued to spend, but they had to rely more on credit and draw down their savings,” she said.
But across the income spectrum, folks are still spending a lot on what they need, and also on what they want. “Consumers are still willing to spend as long as they have a job or good income prospects,” Bostjancic said.
And she said that’ll continue to drive consumer spending well into the new year.
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