It was not a Merry Christmas. U.S. retail sales dipped 0.7 percent in December from November, the U.S. Commerce Department reported. Afraid of getting hit by COVID, running out of money, and locked down by politicians with tighter social restrictions, consumers reduced their store visits.
“Faced with rising transmission of the virus, state restrictions on retailers, and heightened political and economic uncertainty, consumers chose to spend on gifts that lifted the spirits of their families and friends and provided a sense of normalcy,” Matthew Shay, president of the National Federation of Retailers, said in a public statement.
Retail sales were worse than expected in both November and December, which is indicative of a deteriorating overall economy, since some 70 percent of U.S. GDP is consumer-driven.
December marked the third consecutive month of declining consumer spending after a buying spurt over the summer and early fall; spending dropped an adjusted 1.4 percent in November from October.
Spending fell among grocery, department, electronics stores, and bars and restaurants. Consumers upped purchases on clothing, gasoline, health and personal care products, and home improvement.
Despite weak sales overall, online retailers bested last year’s figure by 32 percent, taking in $188 billion.
Strong online gains were unable to boost consumer spending into positive territory over the holidays, indicating most shopping still takes place in the physical locations that economic shutdowns have restricted.
TREND FORECAST: Also in December, the economy registered a net loss of jobs for the first time in eight months. This, coupled with consumers’ reluctance to spend and inability to get money to spend since they are out of work, adds urgency to Joe Biden’s proposed $1.9-trillion stimulus plan, which may give each U.S. citizen another $1,400.
However, a quick flood of stimulus money will only temporarily energize the economy.
Also, because of lockdown restrictions, retail closures, general uncertainty about the future, and the COVID virus’s media predominance that has gripped the nation in fear, consumer spending will remain depressed.
