U.S. Retail Sales Unexpectedly Tumble Amid Higher Prices, Shortages
January 14 2022 - 3:11AM
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A report released by the Commerce Department on Friday
unexpectedly showed a steep drop in U.S. retail sales in the month
of December.
The Commerce Department said retail sales tumbled by 1.9 percent
in December after edging up by a revised 0.2 percent in
November.
The sharp pullback surprised economists, who had expected retail
sales to come in unchanged compared to the 0.3 percent growth
originally reported for the previous month.
Michael Pearce, Senior U.S. Economist at Capital Economics, said
the unexpected slump in retail sales appears to mainly reflect the
ongoing impact of higher prices and supply shortages.
The report showed sales by non-store retailers plummeted by 8.7
percent, while furniture and home furnishing stores, clothing and
accessories stores, sporting goods, hobby, musical instrument and
book stores and electronics and appliance stories also saw sharply
lower sales.
Sales by motor vehicle and parts dealers saw a more modest 0.4
percent drop in December after creeping up by 0.2 percent in
November.
Excluding auto sales, retail sales plunged by 2.3 percent in
December after inching up by a revised 0.1 percent in November.
Economists had expected ex-auto sales to rise by 0.2 percent
compared to the 0.3 percent increase originally reported for the
previous month.
The Commerce Department said closely watched core retail sales,
which exclude automobiles, gasoline, building materials and food
services, also tumbled by 3.1 percent in December after falling by
0.5 percent in November.
Pearce said the initial wave of the Omicron variant of the
coronavirus appeared to have only a small impact, with food
services sales declining by a modest 0.8 percent.
"Factoring in the huge drop in control group sales and modest
hit to services spending, we estimate that real consumption fell by
close to 1.0% m/m last month, which implies growth of just 3.5%
annualized in the fourth quarter," Pearce said. "As a result, we
are lowering our forecast for fourth quarter GDP growth to 4.0%,
from 4.5%."
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