According to the National Association of Manufacturers’ (NAM) Monday Economic Report for this week, retail sales fell 1.9% in December, the first decline since July. The data declined across the board, suggesting that Americans pulled back in their spending at year’s end. Excluding motor vehicles and parts and gasoline stations, retail sales fell 2.5% in December.
In December, the largest declines in retail spending occurred at non-store retailers (-8.7%), department stores (-7.0%), furniture and home furnishings stores (-5.5%), sporting goods and hobby stores (-4.3%), clothing and accessories stores (-3.1%) and electronics and appliance stores (-2.9%). In contrast, retail sales increased at miscellaneous store retailers (+1.8%), building material and garden supply stores (+0.9%) and health and personal care stores (+0.5%).
The Index of Consumer Sentiment declined from 70.6 in December to 68.8 in January, according to preliminary data from the University of Michigan and Thomson Reuters. This was close to November’s reading (67.4), which was a 10-year low. At the start of the new year, Americans felt less positive about both current and future economic conditions.
Consumer sentiment has declined on worries about inflation and the continued spread of COVID-19. Households with income less than $100,000 were more likely to be concerned with higher prices. One-third of those completing the survey felt that they were worse off today versus one year ago, the highest percentage since 2014.