The figures show that retail sales increased steadily in the last month of 2024, rounding off a strong holiday shopping season and indicating that the economy had some momentum going into the new year.
The government said Thursday that U.S. retailer sales in December increased by a seasonally adjusted 0.4%, which was just a little less than what Wall Street had predicted.
However, the 0.8% gain in sales in November was also rather larger than anticipated.
The Federal Reserve stated Wednesday that the majority of the nation had “strong holiday sales that exceeded expectations,” according to its Beige Book economic assessment.
Retail sales provide indicators of the state of the economy and account for around one-third of total consumer spending. Even after accounting for inflation, retail sales increased by over 4% in 2024, which is a respectable rate.
The official economic scoreboard, the gross domestic product, has shown strong readings due to rising retail sales and, more generally, increasing consumer expenditure.
Important information: Before the government’s seasonal adjustments, which can occasionally conceal the strength or weakness of retail sales, receipts really increased in December by roughly twice as quickly.
Heavy discounting, as businesses tried to entice customers with offers, also kept the headline sales figure in check.
In December, auto dealers led the charge once more; following a summer pause, sales had increased for four consecutive months. New automobile and truck sales increased by 0.7%.
Since buying a car requires a significant financial commitment from the buyer, rising car sales are generally an indication of economic prosperity. One-fifth of all retail sales are auto sales.
Even without cars, last month’s retail sales increased by 0.4%.
Another important sector, Internet merchants, saw a very modest increase in sales, but Black Friday sales in November were very successful.
Sales at the restaurant were the only possible concern. For the first time in nine months, they dipped a little.
Although it’s a category to pay close attention to, shoppers may have avoided eating out in order to purchase holiday presents. One of the first things to suffer when the economy starts to deteriorate is restaurant sales.
Overall, the American economy is doing well, but not for everyone.
Those who own stocks, have low mortgage rates, and are higher-income families are all doing well financially and spending a lot of money.
Due to high mortgage rates and persistent inflation in necessities like housing, transportation, and petrol, middle- and lower-class families, renters, and first-time homebuyers have fared worse.
Nevertheless, the U.S. economy has enough momentum going into 2025 to continue its four-year upswing.
Looking ahead: “The Fed is probably going to be held for more reasons after today’s news. In a letter to clients, CIBC Economics economist Ali Jaffery stated, “Inflation is still slightly above target, growth is robust, and the labor market is no longer cooling quickly.”
