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Total retail sales fell by 1.9 percent in December, following gains of 0.2 percent in November and 1.8 percent in October. NAFCU Chief Economist and Vice President of Research Curt Long analyzed the report in a new NAFCU Macro Data Flash report.

"Retail sales growth plunged in December on a seasonally-adjusted basis, which likely reflects earlier holiday shopping this year due to fears of shortages," stated Long. “Among sectors, some of the biggest losers in December, including clothing, sporting goods, and department stores, are ones that typically see strong sales at the end of the year."

Losses were broad across sectors during the month. Sales at nonstore retailers fell by 8.7 percent, followed by furniture stores (-5.5 percent), sporting goods and hobby stores (-4.3 percent), and clothing stores (-3.1 percent). The only winners were miscellaneous retailers (+1.8 percent) and building and garden supply stores (+0.9 percent).

"Sales at restaurants declined by a modest 0.8 percent as diners may have been nervous about the Omicron variant," added Long. "January data will shed more light on the extent to which the holiday season played a role in the weak numbers from December and how much Omicron is weighing on commerce." 

Year-over-year growth in retail sales was up 16.9 percent during the month, which is down from 18.2 percent in November. Control group sales – which excludes auto, gas, and building material categories – were up 17 percent from a year ago.

“Another contraction in sales would be meaningful, as it would suggest broad easing of demand pressures with particular implications for inflation,” said Long. "While a March rate hike from the Federal Reserve seems all but certain at this point, the Fed has left open the possibility that later in the year it could opt for faster balance sheet reductions instead of rate hikes if economic conditions weaken or the yield curve flattens.”

For more up-to-date economic updates from NAFCU's award-winning research team, view NAFCU's Macro Data Flash reports.