Retail sales fell a sizeable 1.1% in December. That is after a 1% drop in November. Consumer strength is wavering.
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Why it matters: Surprising consumer strength has buoyed the economy since COVID, but it finally seems to be buckling under the weight of inflation.
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The broad weakness in the spending data shows no sectors are being spared from consumers pulling back.

By the numbers: Sales were down in almost all categories of spending:
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• Motor vehicles and parts dealers (-1.2%)
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• Furniture stores (-2.5%)
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• Electronics and appliance stores (-1.1%)
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• Health and personal care stores (-0.9%)
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• Gas stations (-4.6%)
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• Clothing and accessory stores (-0.3%)
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• General merchandise stores (-0.8%)
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• Food and drinking places (-0.9%)
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  But: Sales were up at:
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• Building material and garden supply stores (0.3%) and
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• Sporting goods and hobby stores (0.1%)
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  Be smart: There is an ongoing shift in consumer spending from goods to services and experiences. Spending on those is not included in this data.
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  Overall spending may be stronger once accounting for that, but it is unlikely to be strong enough to offset the drop in spending on goods.

Bottom line: The drop in consumer spending has been long-anticipated. It is a major reason many forecasters predict a sluggish 2023.

Curtis Dubay
Curtis Dubay
Chief Economist, U.S. Chamber