Retail sales came in flat for December, according to the U.S. Commerce Department data released Tuesday, extending a stretch of weak demand signals into the year’s closing months. The Commerce Department said spending paused from November to December, a result that stood out to economists who had been looking for continued growth even as they weighed slowing job growth and uncertainty about tariffs and other economic headwinds.
The Commerce Department said retail sales were unchanged in December from November, while business was up 0.6% in November. Economists had expected December retail sales to increase by 0.4%, based on the data timing and the month’s economic backdrop, making the December print a disappointment relative to forecasts.
The release also arrived later than usual, because the report was delayed by a 43-day government shutdown, the Commerce Department said. Economists said the timing matters because it comes at a moment when households’ willingness to spend appears to be lagging behind their outlook, with consumer confidence having soured for months.
Chris Zaccarelli, chief investment officer for Northlight Asset Management in Charlotte, North Carolina, said the pattern had shifted. In a report published Tuesday, he wrote, “Consumer spending has finally caught up with consumer sentiment, and not in a good way,” adding that “This month’s data show that consumers are no longer relentlessly increasing their level of spending.”
Thomas Ryan, North America economist at Capital Economics, described the report as worrisome but pointed to possible support from broader household income factors. He said the report’s weakness could still give way to stronger spending later, arguing consumption “may turn out to be a lot stronger than it currently looks at the start” because of expected stimulus from bigger tax refund checks.
The Commerce Department data show a mixed retail landscape beneath the headline flat reading. The figures were not adjusted for inflation, and the department’s breakdown included declines in categories such as furniture and home furnishings stores and electronics and appliance retailers. The report also cited fewer bright spots, including building materials and garden stores posting a solid sales increase, alongside small gains at gas stations and food and beverage stores.
The report’s snapshot covered only part of consumer spending, because it did not include many services such as travel and hotel lodges. Within the single services category it tracked—restaurants—the data showed a 0.1% dip.
Economists framed the December sales pause against a broader macro picture that remains uneven. They pointed to robust growth in gross domestic product through the third quarter while describing a lackluster jobs trend—employers adding just 28,000 jobs a month since December—compared with much faster hiring earlier in the hiring boom that followed COVID-19 lockdowns.
Economists also said upcoming releases could sharpen the interpretation of December demand. The Commerce Department’s retail-sales snapshot preceded expectations for jobs and unemployment results for January due Wednesday, and a consumer price report due Friday. In December, consumer prices matched the 0.3% increase in November, a comparison economists said could affect how likely the Federal Reserve is to reduce its key interest rate later this year.
At the same time, parts of the retail sector are facing strain that extends beyond December’s monthly number. The story said chains such as Walmart were thriving due to their everyday low prices, while other retailers struggled, with a growing number of store closures as companies reorganize under bankruptcy protection or refocus on profitable operations. Eddie Bauer’s operator filed for Chapter 11 bankruptcy protection on Monday, blaming declining sales and other industry headwinds, and the report also cited recent moves by the parent company of Saks Fifth Avenue and Amazon decisions to close many Amazon Go and Amazon Fresh locations as it narrowed its priorities.
One additional sign that retailers are responding differently to consumer demand came from the variety of category results in December. With declines in electronics and home categories and gains concentrated in building materials and garden stores, the Commerce Department’s breakdown suggested that the demand that remained in December was not evenly spread across household purchases.