Data released by the US Department of Commerce on Thursday showed that retail sales in December rose by 0.4% from the previous month, exceeding expectations and indicating that consumer demand remained strong even at the close of the holiday shopping season. November's retail sales figures were also revised upwards to a growth of 0.8%. Excluding automobiles and gasoline, retail sales in December increased by 0.3% from the previous month.
Additionally, the retail sales control group saw a month-over-month increase of 0.7%, marking the largest gain in three months. This control group excludes food services, auto dealers, building materials stores, and gas stations, and is typically used to calculate goods expenditure in GDP. The data showed that out of 13 categories, 10 experienced sales growth, with furniture and sporting goods stores standing out. Car sales continued to grow by 0.7% in December following strong growth in the previous two months, mainly driven by the potential end of electric vehicle tax credits by the Trump administration, along with declining interest rates and increased promotions by manufacturers. Revenue growth at gas stations reflected rising oil prices.
This data suggests that consumers performed quite strongly during the holiday season, with wage growth outpacing inflation, supporting consumer demand. Despite a slowdown in inflation last month, Americans still face high living costs. Some retailers are considering raising prices to cope with potential tariff increases under Trump's administration, which could affect future retail data, as these sales figures are not adjusted for inflation, meaning the growth might simply reflect rising prices rather than an increase in sales activity.
Overall, retail sales for the entire year of 2024 grew by 3.8%. Although the growth rate slowed, it still surpassed previous expectations, showing optimism among consumers and businesses. Consumer confidence has been steadily rising post-election. Even though inflation expectations are increasing, it remains to be seen if this confidence will translate into stronger consumer spending.
In the three months ending in December, the annualized growth rate of sales in the retail sales control group was 5.4%, indicating robust GDP growth in the fourth quarter.
