December retail sales in the United States rose by 0.6%, signaling a positive conclusion to the Christmas shopping season and affirming ongoing consumer spending confidence.
General merchandise retailers recorded a 1.3% sales increase, with internet and clothing vendors both reporting a notable 1.5% rise. Conversely, the furniture and home goods sector saw a 1% decline, reflecting challenges in the housing market.
Despite economic concerns and increasing costs, consumers continued to spend due to a robust job market and higher salaries, creating a seemingly paradoxical scenario of pessimistic sentiment coexisting with resilient spending behavior.
December saw an increase in American retail spending, capping up the Christmas shopping season and the year on a positive note and indicating that consumers are still feeling secure enough to continue spending money.
The Commerce Department said on Wednesday that retail sales increased by 0.6% in December after increasing by 0.3% in November. According to the research, consumers' spending makes up around 70% of the US economy, therefore they should be able to continue driving economic growth this year.
(Photo : by Spencer Platt/Getty Image)December saw an increase in American retail spending, capping up the Christmas shopping season and the year on a positive note and indicating that consumers are still feeling secure enough to continue spending money.
Sales at general merchandise retailers increased 1.3% of all retail transactions made last month. Both internet and clothes vendors reported a 1.5% rise in sales. In contrast, the furniture and home goods industry had a 1% fall, which was indicative of the weak housing market. In December, restaurant sales were stable.
The final three months of the year saw consumers cut back on spending, as projected by economists due to rising credit card debt, delinquencies, and declining savings. However, a robust labor market and growing salaries are driving household spending despite these obstacles, as well as increased borrowing rates, more stringent credit requirements, and price hikes.
The significant increase in purchases last month also draws attention to a seemingly paradoxical aspect of the American economy: surveys indicate that people are generally pessimistic about the state of the economy and are frustrated by the cost increases in vehicles, rent, food, and other necessities during the last two years. However, the fact that they continue to spend heavily shows that they are confident in both their own finances and the state of the economy.
After reaching a peak of 9.1% in the middle of 2022, inflation has considerably decreased. Costs, however, may still spike. Overall U.S. inflation increased in December due to rising energy and housing costs, suggesting that the Federal Reserve's efforts to bring inflation down to its 2% objective would probably continue to be difficult.
The U.S. consumer's resilience is a positive factor for the economy," said Larry Tentarelli, Chief Technical Strategist at Blue Chip Daily Trend Report. That being said, Tentarelli pointed out that the likelihood of an impending interest rate cut by the Federal Reserve is diminished by the current data in conjunction with other recent indicators that underscore the overall strength of the economy.
An important Fed Board of Governors member, Christopher Waller, stated on Wednesday that the central bank can move slowly in deciding when and by how much to lower its benchmark interest rate as long as the economy is strong.
Economists and investors saw his comments as downplaying the possibility of a rate decrease as early as March, which was anticipated by Wall Street investors and analysts.
According to surveys, a lot of Americans remain gloomy in the meantime. This discrepancy has baffled economists and political observers, and it is expected to be a big subject in the 2024 elections.
The residual financial and psychological repercussions of the worst inflation in four decades are a significant contributing element. Even with declining inflation, a large portion of the people is nevertheless irritated by prices that are still 17% higher than they were before the price explosion.
